THE FINANCIAL FIASCO OF US

THE FINANCIAL FIASCO, IS A BOOK BY JOHAN NORBERG, GIVES THE READER AN INSIGHT INTO THE REASONS BEHIND THE COLLAPSE OF A FEW OF THE BIG FINANCIAL INSTITUTIONS OF US AND THE NEAR COLLAPSE OF THE AMERICAN ECONOMY, LEADING TO BIG JOBLESS NESS IN THE ECONOMY, AND DOWNTURN.
JOHAN NORBERG, IS SENIOR FELLOW AT THE CATO INSTITUTE, WASHINGTON D.C.. HE HAS ANOTHER BOOK TO HIS CREDIT, IN DEFENSE OF GLOBAL CAPITALISM.
THE BOOK IS DIVIDED INTO SIX CHAPTERS, TAKING THE READERS STEP BY STEP INTO THE REASONS FOR THE FIASCO. THE LAYMAN, ALL OVER THE WORLD, INCLUDING THOSE WITH DEEP INSIGHT INTO AMERICAN BANKING HAVE BEEN BLAMING THE WALL STREET FOR THE COLLAPSE. THE AUTHOR, HOWEVER, EXPOSES THE CRITICAL ROLE OF THE US GOVT. AND ITS REGULATIONS IN CREATING THE OPPORTUNITIES AND INCENTIVES THAT LED TO THE ECONOMIC MELTDOWN, FROM WHICH US IS STILL TO COME OUT.
ACCORDING TO THE AUTHOR AMERICA'S INFATUATION WITH HOME OWNERSHIP AND EASY AND CHEAP MONEY CREATED THE ECONOMIC CRISIS. THE BORROWERS FOR HOME LOAN IN US COULD GET AWAY EASILY, IN CASE THEY ARE NOT ABLE TO REPAY THE LOAN, SINCE AS PER GOVT. POLICY, AND FIN. INSTITUTIONS WANTING TO GET BETTER THAN EACH OTHER, WERE LENDING WITHOUT ANY THOUGHT OF SECURITY EXCEPT FOR THE MORTGAGE ON THE HOUSE BOUGHT WITH THE LOAN. THE BORROWER IN CASE HE IS NOT ABLE TO REPAY WILL JUST HAND OVER THE KEY TO THE BANK OR LENDING INSTITUTION AND WALK AWAY SINCE HE HAD NO STAKE IN THE HOUSE.
THE AUTHOR DESCRIBES HOW THE MORTGAGES WERE BOUGHT AND SOLD AND PACKAGED AGAIN IN BONDS AND AGAIN SOLD. THE FIRST LENDER AFTER SELLING THE MORTGAGE HAD NO STAKE, AND AS SUCH NO RISK, AND POSSIBLY THIS LED TO FAILURE OF BEARS AND STERNS, AND OTHER BIG INSTITUTIONS, THE BIGGEST BEING, LEHMAN BROS, AND MERRIL LYNCH. BEHIND THE SCENES REASONS FOR NOT HELPING THESE TO BAIL OUT BY GOVT. IS ALSO ANALYSED. THE ROLE OF FANNIE MAE AND FANNIE MAC, TWO GOVT. CONTROLLED INSTITUTIONS IS ALSO WELL COMMENTED UPON.
THE AUTHOR IN THE FINAL TWO CHAPTERS DESCRIBES THE GOVT'S MISMANAGEMENT AND REFUSAL TO LEARN FROM THE PAST AND REPEATING THE VERY SAME MISTAKES AGAIN THAT CAUSED THE FIASCO.
IN CHAPTERS 1 AND 2 THE READER IS TAKEN THROUGH THE MONETARY AND HOUSING POLICY AND THE OBSESSION OF THE GOVT. AND POLITICIANS TO INCREASE THE SHARE OF FAMILIES WHO OWNED HOMES, EVEN UNDERMINING/IGNORING THE REQUIREMENTS OF CREDITWORTHINESS OF THE BORROWERS.
CHAPTER 3 DESCRIBES THE FINANCIAL INNOVATIONS, TRANSFORMING BIG RISKS TO SMALLER ONES, REPACKAGING, RELABELING AND SELLING THEM. THE GREED FOR MAKING EASY MONEY IS COMMENTED UPON WELL.
CHAPTER FOUR TELLS THE STORY OF HOW THE FALL OF AN INVESTMENT BANK GAVE THE GLOBAL ECONOMY JITTERS AND CARDIAC ARREST.
AN EXTREMELY READABLE BOOK, WHICH IS DISTRIBUTED TO THE TRADE BY NATIONAL BOOK NETWORK.