Review of Complicit by Mark Gilbert

The author's marketing firm was kind enough to send me a complimentary copy of Mark Gilbert's new book called Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.

I enjoyed the book.  It was well-written.  (Mr. Gilbert has written a regular column for Bloomberg News for over a decade.)  What this book brings to the table is a more accessible description of financial constructs that were esoteric, if not non-existent, just a decade earlier.  After hearing about derivatives, collateralized debt obligations, credit-default swaps in the headlines as the giant banks were reeling, it was educational to read Complicit and fill in around the edges a bit.

Each chapter begins with a graph of something against time.  The “something” relates to the content of the chapter.  Here are the chapter titles, with the “Y axis” quantities in parentheses:

1. Bubbles are for Bathtubs (U.S. home ownership percentage)
2. Unsafe at Any Rating (Moody's share price)
3. Priced for Perfection (Stock and Bond market volatility)
4. Bubbles, Bubbles Everywhere (China Foreign Exchange Reserves)
5. Judgment or Luck (Financial Corporate Profits)
6. Knight in Rusty Armor (Bear Stearns' share price)
7. The Noose Tightens (3-month Libor)
8. Central Banks, Unbalanced (Northern Rock's share price)
9. Et tu, Money Markets and Municipals? (European Bond Market Yield Spreads)
10. Giants Fall (Lehman Brothers' share price)
11. Conclusions and Policy Prescriptions (Total market cap of global stock markets)

It's fairly dense reading.  Mr. Glibert doesn't shy away from figures or technical terms, so it's the kind of book that needs to be gone through slowly, or more than once.  (In my case, I'd need to do both.)  But one point that came out again and again was this:  Almost everyone involved was having too much fun and making too much money — bartenders and bouncers included — to turn up the lights, announce last call, and settle all of the tabs.  But happy hour never lasts forever.

If you're interested in a better understanding of the kinds of financial cocktails served up over the past few years — and the massive hangover that's probably just begun — then check out Complicit.