What was the root cause of the recent global financial meltdown?
In this execuBook, author Gillian Tett traces the near-collapse of the world's financial markets back to a 1994 meeting of J.P. Morgan's best and brightest young investment bankers in Boca Raton, Fla. It was there that the idea of trading derivatives based not on assets but on credit was discussed and later turned into a marketable product.
Once credit derivatives were seen to work, they took on a life of their own and were soon being applied to the U.S. housing market. Unbeknownst to the J.P. Morgan bankers, and against their better judgment, the two booming businesses of mortgages and derivatives became fatefully intertwined, with disastrous results.
This summary is a fascinating account of what can go wrong in today's extraordinarily complex markets. It will be of interest to anyone who wants a better understanding of modern finance.
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