Note to readers: for this review, I read the first chapter, and skimmed the rest of the book. (full disclosure) I usually read the entirety of every book I review, but I did not this time. Why? Chapter 1 is the backbone of the book, and tells the whole story in a nutshell. The remaining chapters flesh out Chapter 1. Most of my writings over the past five years shadow what Mr. Zandi has written, and he has created an integrated description that covers every major area of the crisis, with particular attention to mortgages, and the huge effect that the speculative mania in real estate had on the financial economy.
This is a serious book, one that explains the roots of our crisis. If you haven’t understood it in a systematic way from reading my blog, or those that I recommend, this book will give you a coherent explanation of how we got here.
I do have some quibbles with the book. When he describes residential mortgage securitization on page 117, the mezzanine and subordinated tranches are too large, even for subprime. Also, his recommendations in the last chapter — I can agree with most of them, but not with mark-to-market, and the uptick rule.
This edition of the book takes us up to the first quarter of 2009, allowing Zandi to comment on the initial actions of the Obama administration.
All in all a very good book. If you have a relative that doesn’t understand the crisis, this will explain it to him in a simple way. If you want to buy it, you can buy it here:
As with all of my reviews, if you buy something through Amazon after entering through my site, I get a small commission, and you don’t pay anything more. Don’t buy anything that you don’t want to buy on my account, though.
Thanks as always for the book tip and review.
I just have one superficial, first-glance quibble here:
Mr. Zandi is Moody’s Chief Economist. How long has he been Chief Economist in a company that doled out triple-A ratings to toxic debt? Why is he an authority today? Did he ring the alarm bells in recent years when something might have still been salvaged in this disaster?
I googled him and see he has been with Moody’s since 1998. That is the entire decade of accelerating debacle. Though I will give him the benefit of the doubt and allow for his having spoken up about the bond rating and related problems, I do not have data to substantiate it. Short of that, i.m.o. he is just another voice who was complicit and is now trying to make a buck off of it with this book.
I will pass on buying Mr. Zandi’s book.
to AS:
Zandi has been chief economist at economy.com for some time now; the firm was purchased by Moody’s in late 2005 or early 2006. So he wasn’t really a Moody’s employee for the duration that your post suggests. They’re just taking his economy.com years and counting them as Moody’s years, but for most of that time, the companies were not related. He was negative on housing for some time.