When I was a little kid, I loved origami. My teachers gave me books on origami, and my parents reinforced it. I did it all before I was 9 years old. For a geeky little kid, it wasa lot of fun.
But not all origami is fun. Brendan Moynihan, the author of Financial Origami describes how Wall Street transformed ordinary obligations such as mortgages in things that seemed different, but weren’t different.
After all, no matter how you fold it, it is the same piece of paper. And, no matter how the bundle of mortgages gets divided, it is still a bunch of mortgages. Financial engineering can change who takes the losses, but it cannot change the size of the losses.
This book describes the growth in private indebtedness, and describes how it was obscured by securitization, swaps, etc. That obscuration allowed the debt to grow to heights unseen in the Great Depression, relative to GDP.
This is a methodical book that takes matters step-by-step, and doesn’t waste a lot of time on rabbit trails. This is a very focused book.
Who would benefit from this book:
Of all of the crisis books this is the shortest, but it handles the issues adequately. Brevity is the soul of wit, and by that standard, this book has a lot of wit. If you want to buy a short book on the crisis for a friend, this is it.
If you want to, you can buy it here: Financial Origami: How the Wall Street Model Broke (Bloomberg).
Full disclosure: This book was sent to me without my requesting it.
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