Wednesday, 29 February 2012


The subtitle of this book is "The Inside Story of the Collapse of Lehman Brothers," and so it proves to be, written by a former trader there, in a somewhat embarrassingly breathless I-read-bad-thrillers kind of style.

We begin with McDonald's early years, in which we get a bit too much information about his various family issues and his obsession with working on Wall Street. Once he is hired at Lehman the book improves, and the author does an excellent job explaining clearly the complicated financial products that were Lehman's undoing.

What I found particularly interesting was the fact that (at least according to McDonald) long before the crisis many people were aware how shaky the American mortgage market was, including many people at Lehman, and made repeated efforts to get the company out of the web of mortagage debt in which it was entrapped. I'm puzzled by how total the collapse was, and how unprepared the world's governments seem to have been for it, given that so many people seem to have been aware for so long of which way the CDO winds were blowing.

You may recall I recently read Ehrenreich's BRIGHT SIDED, about the role of so-called positive thinking in the financial crisis, and I was interested to see how 'positive' Dick Fuld, the head of Lehman, insisted on being, right through to the bitter, bankrupt end. Warned of the risks by Mike Gelband, the firm's fixed income chief, he responded: "I don't want you to tell me why we can't. I want you to be creative, and tell me how we can. You're much too cautious. What are you afraid of?"

Presumably he was afraid of world wide financial armageddon.

So, an interesting book, but also a sort of interesting view in a trader's life. Leaving aside the horribly bad thriller style writing, what stays with me most is the idea that trading is somehow a higher profession, a profession that singles you out as special, and that making money is genuinely its own reward. I'm sure these ideas are widely held, but you don't usually hear them quite so baldly put. His idea of describing someone is to describe what their fancy flat is like. His description of their work day makes it sound like they were nobly fighting in the trenches. Take this, about a bonus:
Not one day passes when I do not hink with profound gratitude of those moments when I stood up there with Rich and Larry and received my million-dollar reward. No day. No night.
I mean, seriously, get a hobby. Or become obsessed with some woman or something. It's creepy to think about some bonus, every day. Every night.


  1. Yikes, sounds like a really interesting book, and important especially now. But yeah, need a hobby. lol

  2. I know! It was really sad and obssessive!