Books of 2011: 10. All the Devils are Here, by Bethany McLean and Joe Nocera
Before I picked up this book, I didn't really know much about why the financial meltdown happened in 2007-2008. And, quite frankly, I'm still not sure I know much about it. But as they say, now I know what I don't know. It's a known unknown.
Okay, enough with the trite political quotes.
All the Devils are Here is a fascinating book. McLean and Nocera go back thirty years, showing how all the dominoes were put in place and then chronicling them as they all got knocked down. It's incredibly complicated -- as any system this large and interconnected is bound to be -- and McLean and Nocera describe it through the people who made it happen, from Lewis Ranieri, Larry Fink, and David Maxwell back in the 1970s to Ben Bernake and Henry Paulson today. They describe the minds and motivations of CEOs at hedge funds, mortgage brokers, and other Wall Street institutions, weaving it all together so that it forms a massive, tangled play where intentions rarely equal outcomes and no single person could see the mass systemic risk that was about to come crashing down.
McLean and Nocera do a great job of simplifying things down for the lay reader with no financial background (like me). That said, it's still a massively complex story, and I found myself losing track of who the various players were, which institutions they worked for, what those institutions were supposed to do, and what financial vehicles they used to do it. The story is just too complex. I feel like I'd have to read this book two or three times to really get my head around it.
I feel like I have the broad brushstrokes now, which is more than I had when I started. And if there's one thing I learned, it's that it is incredibly difficult to see a bubble when you're in the middle of it.