Fool's Gold

Starred review from May 4, 2009
At once a gripping narrative, an education in derivatives, and a most lucid origin-story for the current financial meltdown, it's no surprise the author of this volume is an award-winning Financial Times journalist. Taking readers back to the invention of credit-derivative obligations (CDOs) at J. P. Morgan in 1994, and the subsequent exponential growth of that market, Tett (Saving the Sun) deploys a remarkable sense of pacing, generating real suspense over rapidly inflating debt on bank balance sheets; by the time Lehman Brothers fails, the book has become a bonafide page-turner. Tett explains how credit derivatives seemed a win-win for the financial world, freeing up capital, increasing profits, and diversifying risk, but makes the missteps equally clear as the industry hurtles toward a largely-unforeseen wave of loan defaults (the worst since the Great Depression). Interestingly, J.P. Morgan was one of a handful of banks sufficiently prescient to imagine this "perfect storm" of simultaneous defaults, and so never became over-reliant on CDOs. Ignoring the tacked-on, preachy epilogue (in which Tett advocates her specialty, social anthropology, as a way to avert future such crises), Tett's explosive, illuminating narrative is the one to read for anyone confused by the present financial mess.

November 30, 2009
Tett's complex and well-written narrative of J.P. Morgan's role in the financial meltdown lends itself awkwardly to the audio format, in part because general readers who are not specialists in the workings of financial derivatives will find themselves lost in a sea of acronyms and specialized terminology without the useful glossary at the back of the print book. Stephen Hoye's talents don't shine here, with an on-again/off-again British accent for one of the key players and a plodding delivery of some portions of the labyrinthine story. An abridgment could have helped to retain listener interest without becoming ensnared in intricately detailed descriptions of events; such descriptions were the lifeblood of Tett's sophisticated print book, but they slow the audio version significantly. A Free Press hardcover (Reviews, June 8).