- Shopping Bag ( 0 items )
FIASCO is the shocking story of one man's education in the jungles of Wall Street. As a young derivatives salesman at Morgan Stanley, Frank Partnoy learned to buy and sell billions of dollars worth of securities that were so complex many traders themselves didn't understand them. In his behind-the-scenes look at the trading floor and the offices of one of the world's top investment firms, Partnoy recounts the macho attitudes and fiercely competitive ploys of his office mates. And he takes us to the annual drunken...
FIASCO is the shocking story of one man's education in the jungles of Wall Street. As a young derivatives salesman at Morgan Stanley, Frank Partnoy learned to buy and sell billions of dollars worth of securities that were so complex many traders themselves didn't understand them. In his behind-the-scenes look at the trading floor and the offices of one of the world's top investment firms, Partnoy recounts the macho attitudes and fiercely competitive ploys of his office mates. And he takes us to the annual drunken skeet-shooting competition, FIASCO, where he and his colleagues sharpen the killer instincts they are encouraged to use against their competitiors, their clients, and each other.
FIASCO is the first book to take on the derivatves trading industry-the most highly charged and risky sector of the stock market. More importantly, it is a blistering indictment of the largely unregulated market in derivatives and serves as a warning to unwary investors about real fiascos, which have cost billions of dollars.
1 A Better Opportunity
2 The House of Cards
3 Playing Dice
4 A Mexican Bank Fiesta
6 The Queen of RAVs
7 Don’t Cry for Me, Argentina
8 The Odd Couple
9 The Tequila Effect
Posted April 16, 2009
For an easy and mostly understandable explanation on why we're in the financial problems we're in-you won't do much better than F.I.A.S.C.O. Written by Frank Partnoy, once a emerging-markets derivative seller for Morgan Stanley, the book walks through in plain English the principles and approaches that have shaped the investment banking industry over the last 15 years-with these remarkable observations: legalized corruption, personal greed, and lifestyles of profane excess.
What are derivatives? Partnoy explains, "A derivative is a financial instrument whose values is linked to, or derived from, some other security, such as a stock or bond." Derivatives come in one of two forms: options or forwards. "An option is the right to buy or sell something in the future. A 'forward'-is the obligation to buy or sell something in the future." When you buy or sell something, you are either capitalizing on current or forfeiting future appreciation in value. Derivatives have at their heart the selling of borrowed goods-something you don't own, and will have to pay back.
This only begins to tell the story, because you have to add in to this mix the use of bonds. Bonds are really nothing more than an IOU with interest. Your city or a local company or the Federal Government issues bonds (debt). You (or somebody else) give them money with the guarantee that over a preset period of time the principle loan amount will be repaid plus interest. The extent to which a city or a government is likely to be able to pay back the bond is reflected in the rating it receives. Hence, rating agencies play the part in assuring you and me (and Japanese buyers) that they'll get their money back. If all of this starts to sound confusing-it's no wonder. Partony regularly describes coworkers in the structured derivative division as "rocket scientist."
While F.I.A.S.C.O unveils the government-approved (and regulated-via Moody's and S&P) gambling of the investment banking industry-it does so in a narrative, and occasionally vulgar and risqué manner.
In a word-the problem that faces us as a nation-is "borrowed." Investment banks have been allowed to gamble with borrowed money. That money first came from mutual funds, hedge funds, corporations, and communities. And when the bets of this money went south, all that remained was to borrow more money-from Uncle Sam.
Where is human morality? Where is compassion? Care for the weak? Concern for the frail? A belief that to hold the trust of others is the greatest investment of all? Partnoy writes, "For most people in the financial services industry, their job is morally ambiguous. That's the only way to survive. I believed mine was, too. Moral ambiguity is fine, especially when your salary is increasing. However, when I began to think, unambiguously, that what I was doing with my life was fundamentally wrong, I simply couldn't do it anymore. I had no choice but to stop."
In the end-the emptiness of deception reveals its ugly head. In the end, Dorian Gray hated the image in the picture. And if there is a moral from all of this, it is the old proverb which-if practiced-would have kept us from this debacle in the first place: the borrower is slave to the lender. Foolish in his own pursuits, Shakespeare's Polonius at least got this right, "Neither a borrower nor a lender be; for loan oft loses both itself and friend." How much more a society, which-when all its lenders be lost-will have nowhere to turn?
Posted March 3, 2009
No text was provided for this review.