Books of the Year: The men who made fortunes out of the crisis

Stories from inside the financial crisis were what fascinated reviewers this year. Media Square chairman Roger Parry picks his top four.

by Roger Parry
Last Updated: 10 Dec 2010

2010 was the year when the chickens hatched by the great crash of 2008 came home to roost. The biggest bust in living memory prompted a slew of books analysing the disaster and aftermath. Profiling the people behind the headlines has become the author's most popular device.

My reading year started with Too Big to Fail by The New York Times writer Andrew Ross Sorkin. At 600 pages it was almost too big to read, but its style set the tone for those to follow with dramatised accounts of events the author could not possibly have witnessed first-hand but which make the story immediate and vital. We are told that at 'seven am on Saturday September 13 the CEO of JP Morgan stood in his kitchen with a headache as he knew too much'. We are taken into the extraordinary world of excess where executives commute daily by helicopter and remuneration packages are in the tens of millions for people who would cost taxpayers tens of billions. This book is mainly the story of how Treasury Secretary Hank Paulson battled to stop the banks going under.

The Greatest Trade Ever by Gregory Zuckerman tells how another Paulson - John, the hedge fund manager - made a profit of $20bn by betting against the very mortgage-backed securities that got the banks into the mess. It also includes personal vignettes such as the wife of one of Paulson's managers going to an ATM to discover that $45m had appeared, without warning, in the family bank account - being the down payment on the monster bonus due to her husband for his part in organising the hedge fund bet that millions of Americans would be unable to pay their mortgages. This is a more technical book for those who want to really understand the arcane world and alphabet soup of CDOs (collateralised debt obligations) and CDSs (credit default swaps).

The Big Short is a more lighthearted approach to the same subject from Michael Lewis of Liar's Poker fame - the master of the 'it sounds complex but here is the human face of finance' approach. Here John Paulson hardly gets a mention but Lewis focuses on a group of contrarian investors who also bet against the sub-prime bubble. It was the outsiders who could see the emperors of the financial establishment had no clothes - and profited richly. His star is Dr Michael Burry, an ex-medical student with one eye and Asperger's syndrome who faced ruin by predicting the crash too soon and being pestered by his own investors to cash out his bets early. But he persevered and ultimately made $700m for them and $100m for himself.

While Wall Street was busy destroying the world economy, the music business had been busy destroying itself. Fortune's Fool by Fred Goodman tells how Edgar Bronfman, Jr took over Warner Music and also goes back in history to profile the larger than life characters who made the music business such a circus. Guy Hands should have read this before buying EMI.

The common, but wrong, perception is Edgar B blew his inheritance from the Seagram drinks empire on a whim to get into music. In fact, this well-researched book shows him as a serious executive wrestling with the combination of an ego-driven business and the technological tsunami of illegal downloading.

Sean Parker was a founder of Napster, a serious problem for the music industry. He also plays a major role in Ben Mezrich's hugely entertaining and rather tabloid account of the founding of Facebook, Accidental Billionaires (Doubleday).

I bought this during a trip to Harvard University, which allowed me to play tourist at the very restaurant where Mark Zuckerberg and Eduardo Saverin plotted the website which would lead them to one of the US's highest profile legal disputes. Mezrich, himself a recent Harvard graduate, has an insider's insight into the student world that nurtured Facebook. The book is the basis of the script of The Social Network.

So, for those who like to have a ringside seat and enjoy meeting the big characters behind the big crashes and battles, 2010 was a great year for books.


Too Big to Fail: Inside the battle to save Wall Street
Andrew Ross Sorkin
Allen Lane £14.99

The Greatest Trade Ever: How one man bet against the markets and made $20bn
Gregory Zuckerman
Penguin £25.00

The Big Short
Michael Lewis
Allen Lane £25.00

Fortune's Fool: Edgar Bronfman, Jr, Warner Music, and an industry in crisis
Fred Goodman
Scribner £18.99

Roger Parry is chairman of Media Square

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