The work of a financial journalist and trained anthropologist, it's simultaneously a triumph of investigative journalism, the anatomy of a financial elite, and a gothic horror story in the style of Mary Shelley's novel, Frankenstein.
In brief, a group of whizzkids at JP Morgan invent a complex set of derivative products they believe will take the risk out of lending money: the fool's gold of the title. When these are used to finance sub-prime mortgage loans, the dream turns into a nightmare. 'What kind of a monster has been created here?' asked one. 'It's like you raised a cute kid who grew up and committed a horrible crime.'
Tett's book raises more questions than it answers. Was Blythe Masters of JP Morgan right to complain that the banks had 'perverted her derivatives dream'? Clearly not. The dream was inherently hubristic: money, invented to to cope with uncertainty, cannot be controlled by maths. By the same token, finance is too important to be left unregulated. Behind the fantasies of the whizzkids were those professors of finance, mainly from the University of Chicago, who claimed that financial markets were perfectly efficient, and government intervention otiose. The Frankenstein created by financial innovation awaits its Karl Marx.