My Favorite Economic Books

The Smartest Guys in the Room by Bethany McLean and Peter Elkind

This book is one I come back to time and again in order to try to understand what those at Enron were thinking. This book has to do with a lot of structured finance but has a lot of the human element in it. A great overall read. On a personal note: my father lost his job because of Enron. Not directly but after Enron tanked they took much of the natural gas industry with them

All the Devils are Here by Bethany McLean and Joe Nocera

I would personally call this the sequel to The Smartest Guys in the Room because of just how many similar themes are in this book. I found it an overall sickening tale knowing how it would all play out in the 2008 financial crisis. Greed, drugs and government incompetence they are all here. This book also shows how arrogant Alan Greenspan was and forever taints my view of him. Someone right before the collapse ran the numbers and found that all of the loans, both bad and good, came out to only a 1.6% profit. That is an abysmal rate. However like the book you will ask at the end, "what was it all for?" The only answer I could come up with was greed for greed's sake, not only on Wall Street but on main street. The homeowners got all the shame and Wall Street got to keep all the money.

Confessions of an Economic Hitman by John Perkins

This is one of the biggest insider stories about corruption between corporations and the United States government. The first part talks about how his childhood basically groomed him into a man who would eventually want the best things in life. The second part details his training to join a powerful conspiracy and then go around the world to sell debt to third world nations. The third part is about how the US with the World Bank use this debt to get resources and other concessions like UN votes. Assassinations, revolutions, guilt and atonement happen during John Perkins life. John was bribed and threatened in order to not write this book. A lot of this book is hearsay so take what you will but there is enough here in my mind to ring the bell of truth.

The Secret History of the American Empire by John Perkins

The sequel to Confessions of an Economic Hitman and is also written by John Perkins. He gives more stories of his own and those of people who contacted him after the publishing of Confessions of an Economic Hitman. When the recent video of an ex-CIA agent came out, this is the book that I immediately thought about. How she described her fellow agents is how many ex-government types in this book described themselves. Again, much of this is hearsay but still feels like it could be true.

Capitalism and Freedom by Milton Friedman

Milton Friedman lays out the case that capitalism is the greatest way to maintain freedom in society. While I do agree with that claim I do have some caveats. Adam Smith (father of modern economics) believed in freedom in markets but also thought that government should be an objective referee between consumers and producers. Say what you wish about money in politics but unfettered capitalism could hurt freedom overall.

The Great Risk Shift by Jacob S. Hacker

It has been a very long time since I read this book but the thesis of this book is that risk is being pushed off of corporations onto the individual. A great example of this concept is the disappearing of private pensions, where a company invests your retirement for you, to the 401k, where you invest yourself. I found it good at the time.

When Genius Failed by Roger Lowenstein

This is about the failure of the massive firm Long Term Capital Management. LTCM was a bond trading firm that used economic models to help predict the bond market. The collapse of Long Term Capital Management nearly caused a global financial crisis in 1999. The only thing that saved it was the Federal Reserve forcing the major banks to funnel money into LTCM. Afterwards LTCM was a financial zombie, only existing to sell off its assets. Less than ten years later, a strong belief in the accuracy of models lead to the financial crisis as detailed in All The Devils Are Here. To me this book shows that models should be questioned and it accurately represents that history should be kept in mind when making decisions.