Financial Shock: A 360o Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis

Front Cover
FT Press, Jul 9, 2008 - Business & Economics - 288 pages
12 Reviews

“The obvious place to start is the financial crisis and the clearest guide to it that I’ve read is Financial Shock by Mark Zandi. ... it is an impressively lucid guide to the big issues.”

The New York Times

 

“In Financial Shock, Mr. Zandi provides a concise and lucid account of the economic, political and regulatory forces behind this binge.”

The Wall Street Journal

 

“Aggressive builders, greedy lenders, optimistic home buyers: Zandi succinctly dissects the mortgage mess from start to (one hopes) finish.”

U.S. News and World Report


“A more detailed look at the crisis comes from economist Mark Zandi, co-founder of Moody's Economy.com. His “Financial Shock” delves deeply into the history of the mortgage market, the bad loans, the globalization of trashy subprime paper and how homebuilders ran amok. Zandi's analysis is eye-opening. ... he paints an impressive, more nuanced picture.”

Kiplinger's Personal Finance Magazine

 

“If you wonder how it could be possible for a subprime mortgage loan to bring the global financial system and the U.S. economy to its knees, you should read this book. No one is better qualified to provide this insight and advice than Mark Zandi.”

Larry Kudlow, Host, CNBC’s Kudlow & Company 

 

“Every once in a while a book comes along that’s so important, it commands recognition. This is one of them. Zandi provides a  rilliant blow-by-blow account of how greed, stupidity, and recklessness brought the first major economic crises of the 21st  entury and the most serious since the Great Depression.”

Bernard Baumohl,Managing Director, The Economic Outlook Group and best-selling author, The Secrets of Economic Indicators

 

“Throughout the financial crisis Mark Zandi has played two important roles. He has insightfully analyzed its causes and thoughtfully recommended steps to alleviate it. This book continues those tasks and adds a third–providing a comprehensive and comprehensible explanation of the issues that is accessible to the general public and extremely useful to those who specialize in the area.”

Barney Frank, Chairman, House Financial Services Committee

 

The subprime crisis created a gigantic financial catastrophe. What happened? How did it happen? How can we prevent similar crises from happening again? Mark Zandi answers all these critical questions–systematically, carefully, and in plain English.

Zandi begins with a fast-paced overview and then illuminates the deepest causes, from the psychology of homeownership to Alan Greenspan’s missteps. You’ll see the home “flippers” at work and the real estate agents who cheered them on. You’ll learn how Internet technology and access to global capital transformed the mortgage industry, helping irresponsible lenders drive out good ones.

Zandi demystifies the complex financial engineering that enabled lenders to hide deepening risks, shows how global investors eagerly bought in, and explains how flummoxed regulators failed to prevent disaster, despite crucial warning signs.

Most important, Zandi offers indispensable advice for investors who must recognize emerging bubbles, policymakers who must improve oversight, and citizens who must survive whatever comes next.

 

  • Liar’s loans, flippers, predatory lenders, delusional homebuilders
    How the housing market came unhinged, and the whirlwind came together
  • Alan Greenspan’s trillion-dollar bet
    Betting on the boom, ignoring the bubble
  • The subprime market goes global
    Worldwide investors get a piece of the action–and reap the results
  • Wall Street’s alchemists: conjuring up Frankenstein
    New financial instruments and their hidden contents
  • Back to the future: risk management for the 21st century
    Respecting the “animal spirits” that drive even the most sophisticated markets
  

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Review: Financial Shock: A 360 Degree Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis

User Review  - ZDR - Goodreads

Very readable. At this point it may be slightly dated, but it nonetheless provides an excellent historical look at the causes of the financial shock. While the full picture is only slowly coming into ... Read full review

Review: Financial Shock: A 360 Degree Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis

User Review  - Diane Kistner - Goodreads

The number one thing I took away from this book is how banks, after pushing people into ARMs that were due to go way up in a few years with the reassurance that they could refinance before that ... Read full review

Contents

Subprime Précis
9
Sizing Up Subprime
29
Everyone Should Own a Home
45
Chairman Greenspan Counts on Housing
63
Global Money Men Want a Piece
79
Bad Lenders Drive Out the Good
95
Financial Engineers and Their Creations
111
Home Builders Run Aground
129
Boom Bubble Bust and Crash
159
Credit Crunch
173
Timid Policymakers Turn Bold
191
Economic Fallout
213
Back to the Future
229
Endnotes
245
Index
259
Copyright

As the Regulatory Cycle Turns
143

Common terms and phrases

About the author (2008)

Mark Zandi is Chief Economist and co-founder of Moody’s Economy.com, Inc., where he directs the firm’s research and consulting activities. Moody’s Economy.com is an independent subsidiary of the Moody’s Corporation and provides economic research and consulting services to global businesses, governments and other institutions. His research interests include macroeconomic and financial economics, and his recent areas of research include an assessment of the economic impacts of various tax and government spending policies, the incorporation of economic information into credit risk analysis, and an assessment of the appropriate policy response to real estate and stock market bubbles. He received his PhD from the University of Pennsylvania, where he did his PhD research with Gerard Adams and Nobel Laureate Lawrence Klein, and his BS degree from the Wharton School at the University of Pennsylvania.

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