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 enlarge | Author: Mark Zandi
Publisher: FT Press
Category: Book
List Price: $24.99
Buy New: $15.18
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Rating:  89 reviews
Sales Rank: 2912
Media: Hardcover
Edition: 1
Number Of Items: 1
Pages: 288
Shipping Weight (lbs): 1.7
Dimensions (in): 9.1 x 6.1 x 0.9
ISBN: 0137142900
Dewey Decimal Number: 332.7220973
EAN: 9780137142903
ASIN: 0137142900
Publication Date: July 19, 2008
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| Customer Reviews:
 Thorough Analysis of the Subprime Shock November 7, 2008
Mark Zandi's "Financial Shock" is simply written and anyone with a rudimentary grasp of Economics 101 will have no trouble understanding the concepts presented in it. Zandi takes care to explain financial terms and concepts that might present difficulty to the layman. As for the treatment of the subject matter, Zandi is thorough in his analysis and I find his opinions on the causes of the current mortgage crisis to be sound, balanced, and for the most part, unbiased.
Zandi first gives a broad picture of the various causes that precipitated the mortgage crisis and examines each one in turn:
- Federal Reserve's deregulatory stance.
- Mortgages and consumer loans were "securitized." and made into tradable securities. With securitization, lenders could originate loans, resell them to investors, and use the proceeds to make more loans -- Global investors bought it all up.
- Lenders lack a system for assessing and managing risk.
- ARM Homeowners and subprime borrowers took on more than they realized. Most of them were lower-income people, less educated people, and members of minority groups who were less apt to understand the terms of their ARM loans.
- Lenders did not require borrowers to prove they had sufficient income or savings to meet the payments - many borrowers lied about their income. (This type of loan thus became known among mortgage-industry as "liars' loans.")
- Appraisals were based on cursory drive-by inspections and on nearby homes that had recently been sold or refinanced.
- Home builders over-estimated the demand and kept on building through summer 2006.
- Flipers bid up property prices
Terms such as "flippers", "ARM", "subprime", "securitization", and others are all explained.
The book also offers some startling facts. Here are a couple of excerpts:
"Starting in 2000, prices crossed above their trend line and just kept going up.
The spike had never happened in modern U.S. history, according to data dating back
to 1890 that Shiller painstakingly compiled for the second edition of his book
Irrational Exuberance in 2005."
"The frenzied lending hit an apex in 2006. Of the $3 trillion in loans extended to all mortgage borrowers that year, $614 billion were subprime, $475 billion were alt-A, and $395 billion were jumbo ARMs. An incredible $250 billion in the riskiest stated-income, no-down-payment subprime ARM loans were originated."
I do have a word to say about the charts and illustrations in this book. As some have noted the grayscale charts and illustrations make it very difficult to distinguish among the data elements represented.
Despite this little downside, I found the book to be highly informative, and have helped me gain insight and understanding into the factors that led to the housing crash. I think you will find this a very worthwhile read.
Simple, Clear Explanation of The Financial Meltdown November 7, 2008
I am a twenty year Financial Consultant, Real Estate Agent, Insurance Agent. Although I am in the broader industry where these events have and still are occuring, there are many facets of the meltdown of which I was not familar. I found Mark Zandi to be very knowledgable, and to have an insight into the inner workings of the investment world that many of us working in it do not have.
Mr. Zandi has provided a good background, then explained each area that played a part in the Financial Crisis, and finally gave some excellent apraisals of the various players and their culpability. He summarizes with excellent suggestions for making the regulatory and policy changes that he feels will protect our markets and economy from future crisis.
This book is very well written and provides an understanding for readers at all levels. It would make a good educational tool for students.
Cliff Notes for 08 financial crisis November 5, 2008
Short sweet and to the point. An easy read that clearly and concisely describes how we got to where we are with the financial mess not only affecting the U.S. but the world.
Riveting, Even With its Flawed Conclusion November 2, 2008
Mark Zandi's "Financial Shock" delivers on its promise of providing a 360 degree look at the subprime mortgage crisis. Zandi was also right in calling the subprime mortgage crisis the nation's motion significant economic crisis since the Great Depression. Given the publication release date, he was also prescient in predicting that the Federal government would not let Fannie Mae and Freddie Mac go under. Zandi's depiction of the whirling vortex surrounding the subprime crisis reveals that at its zenith, the business of mortgage and mortgage investment was nothing more than a colossal Ponzi scheme. The maddeningly ironic thing about the business of speculating in mortgages was that this was an idea that was the basis for a startup business at Enron (See Brian Cruver's Anatomy of Greed: Telling the Unshredded Truth from Inside Enron).
As astute as Zandi's analysis is, in an astounding stroke of misguided optimism, Zandi also concludes that the "worst" was over. Given his analysis, the logical conclusion was that the ripple effect from the subprime mortgage crisis and the fall of Bear Stearns would have a ripple effect on financial markets and institutions (an aftershock if you will). Shortly after its release, Lehman Brothers, AIG and the State of New York all went into the tank. It begs the question, did he really believe that the worst was over or were other forces at work?
excellent overview October 29, 2008
Dr. Mark Zandi, the author of Financial Shock is a person of impeccable credentials and a brilliant mind. Financial Shock is a quite timely book that provides an overview of the Subprime Mortgage Implosion. In Financial Shock, Dr. Zandi examines issues surrounding this financial quagmire. He starts with factors leading up to the implosion, the belief that everyone should own a home, the role of the housing mercurial rise in providing investors alternatives to the traditional stock market, world-wide expanding investment, more competitive less honest lenders reduce or eliminate the proportion of loans made by more honest lenders, what are the new financial products that could be traded, effects on the construction industry, regulation and deregulation, the housing cycle, credit restriction globally, policy, and economic consequences.
I think that Zandi provides a crisp analysis of the problems surrounding the most dire financial crisis the world has seen in the last 79 years. He is a brilliant writer. I believe that this book is an excellent book to help the novice and perhaps undergraduates in understanding the economic, social, political factors that converged to create this financial devastation. He writes in a light, yet matter of fact style. It is a quick read and is very enlightening.
I wish that Dr. Zandi's book would have included greater detail on economic theories, policies and policy makers, who influenced whom in the development of de-regulation, forces involved in expanding the housing market instruments to less qualified persons, effects of the housing bubble on construction supply companies and state and local governments and real estate firms and schools and individual taxpayers, where have all the profits gone ... This is an outstanding book for the individual who wants to spend an afternoon or so in understanding the basics of the current financial crisis. So many of the basic facts were repeated throughout the book and it did not go into as much detail as I would have liked.
Overall, I believe that this is an excellent addition to the literature. It provides an excellent overview of the current financial crisis. I would give it an A-. I believe that for anyone interested in this issue and who does not have significant training or experience, this book is highly recommended. I think that this book would receive less enthusiastic welcome by MBAs and economists who already know and have surmised everything presented in this book.
Again, well worth the read, new or used.
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