By Leah Spiro
Extreme Money is a highly idiosyncratic, provocative tour of
the past 30 years in finance, from Drexel Burnham Lambert's
Mike Milken to Blackstone's Steve Schwarzman. Author Satyajit
Das, a finance industry insider-cum-Cassandra, takes a dark
view of the industry, portraying its denizens as parasites,
locusts, pimps and hypocrites. "In good times, bankers are
capitalists. During crises, bankers are socialists," he writes.
|Extreme Money: Masters of the Universe and
the Cult of Risk
By Satyajit Das
Das argues that over the past 30 years, what he calls the
extreme money economy has hijacked the real economy. Extreme
money is like extreme sports. Instead of a regular sport such
as baseball, which focuses on competition, extreme sports
require physical challenges like parachuting off buildings and
bridges for the sheer thrill of it. This is not the regular
money that you keep in your wallet and use to buy lunch.
Extreme money is complex, leveraged and dangerous.
Das details five types of extreme money: private equity,
hedge funds, securitization, structured finance and
derivatives. He posits that hedge funds and private equity
managers are financial oligarchs who rose to power in the past
three decades, courtesy of Milton Friedman and celebrity
central banker Alan Greenspan and even Ben Bernanke. They
preached what Das calls "financial fundamentalism," or the
Chicago pro-free markets school of economics, which "was
actually political ideology," writes Das.
Das knows well what he writes about, having worked in
finance for decades. He is a derivatives consultant who worked
at Citigroup and Merrill Lynch. In 2006, he flagged the dangers
of the structured credit markets in a speech called "The Coming
Credit Crash." The author of "Traders, Guns & Money"
(2007), he blogs for the Big Picture and Wilmott. In 2010, he
made an appearance as a market naysayer in the documentary film
Das rails against what he calls hedge funds' promiscuous
access to banks and leverage. "Hedge funds are courtesans,
high-class prostitutes whose clients come from the wealthy.
Banks are the pimps and bordello keepers," writes Das. He
recounts his own experience helping a European bank invest in a
hedge fund. Changing the names to disguise the real people, he
portrays the hedge fund managers as three-card monte dealers
trying to fleece the overeager bank.
Das also targets the hubris. He dismisses George Soros as
craving "acceptance as a thought leader" and unearths a quote
about Soros' 1998 book, "The Crisis of Global Capitalism" from
the Economist: "Mr. Soros gorged on chopped philosophy, mashed
economics and facts and figures swimming in grease." Das goes
on to slam Soros for his philanthropy: "Half the day he engages
in the most ruthless financial exploitations, ruining the lives
of hundreds of thousands, even millions. The other half [of the
day] he just gives part of it back," says Das, quoting a
John Paulson, Ray Dalio and Steve Cohen also come under his
withering pen. Paulson's crime is making $5 billion in 2010
without helping to create any jobs or wealth. Dalio's fault is
indulging in "billionaire drivel" in a management manifesto.
And Steve Cohen's failing is his taste in art and his
Das's strong suits are his pithy quotes, his flashes of
insight and his willingness to criticize powerful people.
However, he is prone to sweeping generalizations,
unsubstantiated conspiracies and a hyperactive writing style.
Nuanced he is not, but with the global economy in tatters, look
for more populist books like this that blame the world's woes
on hedge funds, the purest of capitalists.
Leah Spiro is president of Riverside Creative Management, a