[EdPowell]

When the financial crisis hit and I lost a ton of money, it became critical that I learn all I could about the financial crisis from as many perspectives as possible.  In furthering that cause, I read the following books (presented in the order I read them).  I give them here along with my one sentence evaluation of the work.  If anyone disagrees with my evaluation, I welcome correction.

Meltdown, Tom Woods —  A  

A very clear and readable explanation of the housing boom and bust and its relation to both the Federal Reserve in particular and the Austrian theory in general.  Best overall presentation.

Crash Proof, Peter Schiff  —  B+

Written before the crash, this book predicts what happened with uncanny (if not quite 100%) accuracy.  Only problem is that he thought foreign stocks would be safer, which they were not.

The Housing Boom and Bust, Thomas Sowell  —  A  

Focusing solely on the housing element, especially the Community Reinvestment Act and other housing policies, that guaranteed the bubble would be in this sector.  Sowell is his usual brilliant self.

Getting Off Track, John Taylor  —  B  

The economist who invented the “Taylor Rule” for managing interest rates shows how the Fed over-inflated in the mid 2000s.  Somewhat technical.

Econospining, Gene Epstein  —  B+  

An entire book on how “unemployment” is calculated and what bizarre machinations go into manipulating this one number.

End the Fed, Ron Paul  —  A-

Paul’s interesting history of the origin and function of the Fed along with his own intellectual evolution and the role he played in overturning the ban on private ownership of gold.  Does not specifically deal with the crash, but is interesting nonetheless.

The Greatest Trade Ever, Gregory Zuckerman —  A

John Paulson decided that the market for mortgage-backed securities was going to tank, and wondered how he could make money out of it.  He made $16 billion in the greatest trade ever.

The Big Short, Michael Lewis —  A+

The story of the other traders (other than Paulson) who predicted the collapse and invented new ways to make money during it.  Lewis is a brilliant narrator, intermixing humor and a clear description of often technical topics.  Lewis really understands his subjects and the financial industry.  The single best book on the list.  A must read.

Liar’s Poker, Michael Lewis —  A+

Lewis’s autobiographical story of his life as a bond trader at Salomon Brothers in the 1980s becomes a tale of the rise and fall of Salomon itself.  Absolutely brilliant.

Crisis Economics, Nouriel Roubini  —  C

Roubini also predicted the crash, but as a mainstream pragmatist economist, his attempt to explain it lacks the theoretical superstructure necessary for a coherent analysis.

Deep Freeze: Iceland’s Economic Collapse, Philipp Bagus and David Howden  —  B

How did a small country become a banking powerhouse and then suddenly go completely bankrupt?  Try borrowing huge sums in one currency and lending them in another.

Reckless Endangerment, Gretchen Morgenson — A+

A relentless expose of the fraud and abuses at Fannie and Freddie over the years.  Quite eye-opening, and should be mandatory reading for every homeowner.

How an Economy Grows and Why it Crashes, Peter Schiff  —  C

This books starts off great explaining by example the benefits of division of labor, but soon his analogy gets too stretched and the book becomes unreadable.

Currency Wars, James Rickards  —  A+

Excellent description of “competitive devaluation” and the long road to economic ruin that is caused by these “wars.”  Includes a fascinating account of a Pentagon-sponsored simulation of a currency war, as well as descriptions of wars past.

To Big To Fail, Andrew Ross Sorkin   —  A-

A journalistic chronicle of the crash, from Bear to TARP, but focusing almost half the book on the week before the Lehman failure.  Well written and engaging, but the author draws no conclusions, those are left to the reader.

The Financial Crisis and the Free Market Cure, John Allison   —  B+

A broad overview of the crisis from the prospective of a bank executive, including some key insights of the causes.  But the writing is mediocre and sometimes repetitive.  A couple of errors (or oversimplifications) make it seem the author is talking down to the readers.

Bailout, Neil Barofsky   —  C

The Special Inspector General of TARP explains how the TARP money was wasted and/or stolen, while simultaneously not realizing that a program like TARP necessarily consisted of waste, fraud, and abuse.

[AdamSchmitz]

Ed, thank you for this list. I have read Sowell’s book and agree with your rating. I’m currently about half way through “Meltdown” and it is also very enlightening. Both of these books are recommended in Yaron Broook’s lecture “The Financial Crisis: What Happened and Why” found here https://estore.aynrand.org/p/134/the-financial-crisis-what-happened-and-why-mp3-download.  I highly recommend this lecture.

[EdPowell]

Thanks, Adam, I’ll check that talk out. Should be on YouTube, though.

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