Journalists and Pundits "Explain" Past and Current Market CollapsesDecember 19, 2008 Donald Mitchell(Boston) 4 out of 4 found this review helpful
Unless you feel compelled to read every word that Michael Lewis writes, skip this book.
Panic! is a very peculiar concept for a book: Assemble mostly stories by journalists (and a few pundits) to describe the mood before, during, and after market crashes . . . while also providing a little understanding of "why" the market crashed. To me, that's a little like expecting sports journalists to predict who will be the best-performing athletes next season . . . and then explain why their predictions didn't pan out.
What do journalists know about financial markets? Based on reading these articles, precious little.
There are occasional gems that bear reading and serious consideration, but they are too few and too far between.
The articles are grouped around the market collapses that began with the October 1987 meltdown driven and aided by "portfolio insurance" program trades and move on to the currency runs on Thailand and Russia in 1997 and 1998, the Internet stock collapse in 2000, and the subprime mortgage fiasco recently spreading into the stock market crash of 2008-.
I predict that most readers will find the articles "describing" 1987 to be pretty confusing. There are better articles written about the period that are omitted from this collection. The currency runs are only slightly less confusing. The last two disasters are easier to follow if you aren't an economist or someone who watches CNBC six hours a day.
The standout of all the articles is the essay by Dave Barry, "How to Get Rich in Real Estate," from Dave Barry's Money Secrets. It's hilarious and right on. It's too bad the rest of the writing isn't as good.
Don't get me wrong. Michael Lewis knows how to write about finances in an entertaining way (even if he admits that he doesn't understand the newfangled financial instruments all that well), but he contributed only seven of the substantive articles in the collection. Two of them you will have read before (from Liar's Poker and The New, New Thing). One of them seems offbase to me ("In Defense of the Boom" which seems to say that having a wildly overpriced stock market in Internet stocks was a good thing).
I would have graded the book lower, but I was pleased to see that Mr. Lewis understands that the typical austerity advice that the IMF and the World Bank peddle to underdeveloped countries when there is a run on their currency is all wet. If we followed that advice in the current crisis, our short-term interest rate would be 22 percent and about 15 million more Americans would already be out of jobs.
At a time when one of the greatest financial messes in the history of the world is being unveiled daily in front of you, I would suggest you skip this book and watch the far more fascinating drama that's going on now. Clip the articles that you like, and you too will be able to produce a book like this one at some point.
