Traders, Guns and MoneyKnowns and unknowns in the dazzling world of derivatives Revised edition
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Traders Guns and Money is a wickedly comic exposé of the culture, games and pure deceptions played out every day in trading rooms around the world. And played out with other peoples money.
A sensational insiders view of the business of trading and marketing derivatives, this revised edition explains the frighteningly central role that derivatives and financial products played in the global financial crisis.
This worldwide bestseller reveals the truth about derivatives: those financial tools memorably described by Warren Buffett as financial weapons of mass destruction. Traders, Guns and Money will introduce you to the players and the practices and reveals how the real money is made and lost.
The global financial crisis took almost everyone by surprise and even now new problems keep appearing and solutions continue to be elusive. In the original version of Traders, Guns and Money, Satyajit Das provided a highly prescient insight into the structure and risk of the world financial system exposing the problems that are becoming readily apparent. In a 2006 speech The Coming Credit Crash Das argued that: "an informed analysis shows that risk is not better spread but more leveraged and (arguably) more concentrated . This does not improve the overall stability and security of the financial system but exposes it to increased risk of a "crash".
List of figures and tables
Miracles and mirages
Beginning of the end/end of the beginning
Knowns and unknowns
1 Financial WMDs – derivatives demagoguery
It’s all Chinese to me
A derivative idea
Under the radar
Whole lotta swapping going on
The golden age/LIBOR minus 50
2 Beautiful lies – the ‘sell’ side
Smile and dial
The medium is the message
Lost in translation
A day in the life
3 True lies – the ‘buy’ side
Turn of the fork
Stripping or stacking/hedging perils, again
‘Zaiteku’ or the bride stripped bare
The gamble in P & G
Gnomes of Zermatt and Belgian dentists
Alpha, beta, zeta
Looking after the relatives
Unique selling propositions
4 Show me the money – greed lost and regained
Take a seat
On the platform
A day at the races
Black swans, black sheep
Oracle of Delphi
The colour of money
A comedy of errors
What’s the number?
Nothing like excess
Nice work if you can get it
Dukes of Hazard
5 The perfect storm – risk mismanagement by the numbers
Among the unbelievers
In the long run . . .
Secret trader’s business
Let the good times roll
The perfect storm
6 Super models – derivative algorithms
Out of the sheltered workshops
Failing the model test
CSI (Crime Scene Investigation) 1987 – ‘Oh LOR-dy!’
CSI 1992 – ERM (extremely risky, man!)
CSI 1998 – selling England by the pound
CSI 1998 – Asian fever
Omitted variable bias
7 Games without frontiers – the inverse world of structured products
Driving over lemons
The best of times . . . the worst of times
It wasn’t me, sir
Heaven and hell
Power to the people
Take no prisoners
The usual suspects
8 Share and share alike – derivative inequity
Billion dollar baby
Taking it over
Buying back the farm
Who’s fooling who?
Pearls of wisdom
9 Credit where credit is due – fun with CDS and CDO
Heard it on the grapevine
Re-re-re-re-restructuring – CDS stutters
Beyond the push and pull
Imitation and flattery
A capital idea
The arbitrage age
Geeks with Greeks
Never believe your own lies
The Asian century redux
The more things change
Bangs and whimpers
The China Club
BOAT (Best of all time)
Knowns and unknowns
Afterword: Credit crunch – the new known known of financial markets
Living in the Age of Kali …
Supersize my debt!
Would you like debt with that?
The new liquidity factory
Lying NINJA mortgagors
The lines of transmission
It’s different this time!
The bear comes out of hibernation
Waiting for the other shoe to fall …
Financial shell games
The short and long of it all
Missing the mark
Truth in labelling
Reversion to mean
Satyajit Das is a globally known and respected consultant in the area of financial derivatives and risk management. He is the author of bestselling Traders,Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives and Extreme Money.
EXTREME MONEY: THE MASTERS OF THE UNIVERSE AND THE CULT OF RISK, the new title from bestselling author Satyajit Das, is now available to pre-order on Amazon.
"Funny, readable and peppered with one-liners from Groucho Marx, "Traders, Guns & Money" offers an ideal primer for anyone tempted to take a walk on the derivative side."
James Pressley, Bloomberg.com
a distinctly timely book ....Traders, Guns and Money, tries to reach out to the mathematically challenged to explain how the world of derivatives really works.
Gillian Tett, Financial Times
The sexier side of finance ... at last ... a convincing picture of what life is like in today's modern financial industry.
...a fascinating and compelling insight into the world of derivatives... a page turning quality more reminiscent of a John Grisham novel than a dissertation on derivatives.
....more riveting than the Da Vinci Code...in the mould of Liars' Poker...an insiders account of how derivatives markets work...
Goola Warden, The Edge
this is possibly the best insider account of a career in investments since Michael Lewis's book Liar's Poker
.I can't recommend this book strongly enough.'
... a beginner's guide to the often unsavoury and murky world of trading...a surprisingly gripping account ....
A worthwhile read for anyone with connection to the financial world.
. must read for all CEOs, CFOs, bankers and anyone who cares about what banks are doing with their money.
Lara Wozniak, www.financeasia.com
an amusing, down-to-earth look behind the scenes of the derivatives market
.There were several times I laughed out loud
... a scalpel of a book
Financial Engineering News
Das audacity is commendable as he does not hesitate to challenge the greatest intellectuals of quantitative finance like Myron Scholes and Fischer Black .Overall, he does a splendid job of portraying the obsessive mentality of the traders that anything can be traded.
Medill Money Mavens, August 2010