Traders, Guns and Money: Knowns and unknowns in the dazzling world of derivatives Revised edition

Overview

Traders Guns and Money is a wickedly comic exposé of the culture, games and pure deceptions played out every day in trading rooms around the world. And played out with other people’s money.

A sensational insider’s view of the business of trading and marketing derivatives, this revised edition explains the frighteningly central role that derivatives and financial products played in the global financial crisis.

This worldwide bestseller reveals ...

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Overview

Traders Guns and Money is a wickedly comic exposé of the culture, games and pure deceptions played out every day in trading rooms around the world. And played out with other people’s money.

A sensational insider’s view of the business of trading and marketing derivatives, this revised edition explains the frighteningly central role that derivatives and financial products played in the global financial crisis.

This worldwide bestseller reveals the truth about derivatives: those financial tools memorably described by Warren Buffett as ‘financial weapons of mass destruction’. Traders, Guns and Money will introduce you to the players and the practices and reveals how the real money is made and lost.

The global financial crisis took almost everyone by surprise and even now new problems keep appearing and solutions continue to be elusive. In the original version of Traders, Guns and Money, Satyajit Das provided a highly prescient insight into the structure and risk of the world financial system exposing the problems that are becoming readily apparent. In a 2006 speech – The Coming Credit Crash – Das argued that: "an informed analysis … shows that risk is not better spread but more leveraged and (arguably) more concentrated…. This does not improve the overall stability and security of the financial system but exposes it to increased risk of a "crash".

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Editorial Reviews

From the Publisher

EXTREME MONEY: THE MASTERS OF THE UNIVERSE AND THE CULT OF RISK, the new title from bestselling author Satyajit Das, is now available to pre-order on Amazon.

"Funny, readable and peppered with one-liners from Groucho Marx, "Traders, Guns & Money" offers an ideal primer for anyone tempted to take a walk on the derivative side."
James Pressley, Bloomberg.com

‘……a distinctly timely book ....Traders, Guns and Money, tries to reach out to the mathematically challenged to explain how the world of derivatives “really” works.’
Gillian Tett, Financial Times

‘The sexier side of finance ... at last ... a convincing picture of what life is like in today's modern financial industry.’
Corporate Financier

‘...a fascinating and compelling insight into the world of derivatives... a page turning quality more reminiscent of a John Grisham novel than a dissertation on derivatives.’
FINASIA

‘....more riveting than the Da Vinci Code...in the mould of Liars' Poker...an insider’s account of how derivatives markets work...’
Goola Warden, The Edge

this is possibly the best insider account of a career in investments since Michael Lewis's book Liar's Poker….I can't recommend this book strongly enough.'
www. dna.bloggingstocks.com

‘... a beginner's guide to the often unsavoury and murky world of trading...a surprisingly gripping account ....’
Money Week

‘A worthwhile read for anyone with connection to the financial world.’
WorldFinance.com

…. must read for all CEOs, CFOs, bankers and anyone who cares about what banks are doing with their money.’
Lara Wozniak, www.financeasia.com

‘…an amusing, down-to-earth look behind the scenes of the derivatives market….There were several times I laughed out loud….’
www.runningofthebools.typepad.com

‘... a scalpel of a book’
Financial Engineering News

“Das’ audacity is commendable as he does not hesitate to challenge the greatest intellectuals of quantitative finance like Myron Scholes and Fischer Black….Overall, he does a splendid job of portraying the obsessive mentality of the traders that anything can be traded.”
Medill Money Mavens, August 2010

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Product Details

  • ISBN-13: 9780273731962
  • Publisher: FT Press
  • Publication date: 8/13/2010
  • Series: Financial Times Series
  • Edition number: 2
  • Pages: 384
  • Sales rank: 705,822
  • Product dimensions: 5.20 (w) x 8.40 (h) x 0.70 (d)

Meet the Author

Satyajit Das is a leading international authority in the area of financial derivatives and treasury management. He was the treasurer for the TNT Group on Australia for six years. Prior to this he worked in the Commonwealth Bank of Australia, Citicorp Investment Bank and Merrill Lynch Capital Markets. He is the author of Swap Financing and has published widely on financial derivatives, corporate finance, treasury and risk management. He has presented seminars on financial derivatives and treasury management/corporate finance all over the world.

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Table of Contents

List of figures and tables xiii

Preface to the revised edition xv

Preface to the first edition xvii

Prologue 1

Miracles and mirages 2

Serial crimes 5

Beginning of the end/end of the beginning 9

Knowns and unknowns 12

Unreliable recollections 13

Summary judgment 17

1 Financial WMDs - derivatives demagoguery 19

School days 21

It's all Chinese to me 22

A derivative idea 23

Betting shops 25

Secret subtexts 27

Leveraged speculations 29

Under the radar 32

Whole lotta swapping going on 33

The golden age/LIBOR minus 50 37

Warehouses 40

Serial killings 43

Forbidden fruit 45

Derived logic 50

2 Beautiful lies - the 'sell' side 53

Smile and dial 55

Market colour 56

Rough trade 59

Analyze this 62

Class wars 64

Ultra vires 66

Feudal kingdoms 67

Uncivil wars 68

Golden rules 70

Business models 71

The medium is the message 74

Bondage 75

Tabloid cultures 76

Conspicuous currency 77

Ethnic cleansing 79

Foreign affairs 80

FILTH 81

Lost in translation 82

A day in the life 83

3 True lies - the 'buy' side 87

Turn of the fork 88

Risky business 89

Magic kingdoms 91

Stripping or stacking/hedging perils, again 95

Me too 97

'Zaiteku' or the bride stripped bare 98

The gamble in P & G 101

Tobashi, baby 105

Gnomes of Zermatt and Belgian dentists 107

Death swaps 108

Investment fashions 110

Alpha, beta, zeta 112

Looking after the relatives 115

Agents all 116

Unique selling propositions 117

4 Show me the money - greed lost and regained 121

Money uncertainty 122

Toll booths 123

Take a seat 125

Efficient markets 126

On the platform 127

A day at the races 129

Black swans, black sheep 130

Trading places 131

Secret intelligence 133

Overwhelming force 134

Oracle of Delphi 135

Free money 137

The colour of money 138

In reserve 140

A comedy of errors 141

Black holes 143

What's the number? 146

Nothing like excess 148

Nice work if you can get it 149

Dukes of Hazard 151

5 The perfect storm - risk mismanagement by the numbers 153

Shock therapy 154

Holy risk! 155

Bisk spin 156

Risqué matters 158

Placebo effects 160

Among the unbelievers 162

Risk cults 164

In the long run… 167

Modus operandi 169

Secret trader's business 170

Let the good times roll 171

The perfect storm 172

Weather forecasts 173

Endgame 175

Mean risk 176

Extreme sports 177

6 Super models - derivative algorithms 181

Out of the sheltered workshops 182

Rocket science 184

Culture wars 185

Conveyor belts 187

Trivial pursuits 188

Grand oprey 189

The quest 190

Genesis 193

Gospels 196

Greek tragedies 198

Failing the model test 200

CSI (Crime Scene Investigation) 1987 - 'Oh LOR-dy!' 202

CSI 1992 - ERM (extremely risky, man!) 203

CSI 1998 - selling England by the pound 204

CSI 1998 - Asian fever 206

Model envy 208

Omitted variable bias 209

7 Games without frontiers - the inverse world of structured products 211

Driving over lemons 212

The best of times … the worst of times 214

Ghostbusters 216

It wasn't me, sir 217

Heaven and hell 217

Split personality 220

Golfing holidays 222

The flood 224

Power to the people 226

Recycling junk 230

Six packs 232

Take no prisoners 234

The usual suspects 236

8 Share and share alike - derivative inequity 241

Billion dollar baby 242

Self arbitrage 245

Arbitraging others 246

Taking it over 248

Buying back the farm 249

Who's fooling who? 250

Strippers 253

Pearls of wisdom 254

Own goals 257

Taxing times 260

Fund times 262

9 Credit where credit is due - fun with CDS and CDO 265

Credit wars 266

Credit epiphanies 267

First-to-credit derivatives 269

Remote credit 271

Mistaken identity 274

Heard it on the grapevine 276

Guaranteed delivery 277

Re-re-re-re-restructuring - CDS stutters 279

Beyond the push and pull 281

Imitation and flattery 282

Tranche warfare 285

It's super 287

A capital idea 289

The arbitrage age 290

Hangovers 291

UFOs 292

Geeks with Greeks 293

Never believe your own lies 295

Russian dolls 297

Black holes 298

Epilogue 301

The Asian century redux 302

Vexatious litigation 305

The more things change 308

Hot tubbing 310

Rogue trader 313

Bangs and whimpers 316

The China Club 317

BOAT (Best of all time) 318

Knowns and unknowns 319

Afterword: Credit crunch - the new known known of financial markets 321

Living in the Age of Kali … 321

Supersize my debt! 322

Would you like debt with that? 323

The new liquidity factory 325

Lying NINJA mortgagors 325

The lines of transmission 327

It's different this time! 329

The bear comes out of hibernation 330

Waiting for the other shoe to fall … 331

Financial shell games 333

The short and long of it all 336

Model shock 336

Missing the mark 337

Truth in labelling 339

Regulatory irregularities 341

Reversion to mean 342

Credit crunch 343

Notes 345

Index 349

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  • Anonymous

    Posted November 3, 2011

    Great inside look at derivatives and the traders before the crash

    A bit short on narrative style with a broken and somewhat choppy structure, but the book makes up for that with the author's inside knowledge of the world of traders and his knowledge of derivatives, which he can quite often distill into a few apt sentences. Also, it was written in 2006 before the crash and you can see the abject greed and criminal intent associated with these people.

    1 out of 1 people found this review helpful.

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