Monday, December 21, 2009

The Wall Street Journal Guide to the end of Wall Street as we know it

The Wall Street Journal Guide to the end of Wall Street as we know it : what you need to know about the greatest financial crisis of our time - and how to survive it by Dave Kansas, former editor of Wall Street Journal, gives a brief history of the new investment strategies of risk, like derivatives which are used by investors to speculate and make a profit if the value of the asset moves the direction they expect. He covers the mortgage derivatives that were bundled risky mortgages that caused the economic crisis in 2008 since the price of the houses were inflated and due to economic downturn caused by risky investments of big corporations and the Wall Street, people started losing jobs and couldn't afford to make the house payments. "Members of President Clinton's Working Group on Financial Markets: Larry Summers, Alan Greenspan, Arthur Levitt, and Robert Rubin, have been criticized for torpedoing an effort to regulate the derivatives' markets, and thereby helping to bring down the financial markets in Fall 2008. President George W. Bush has also been criticized because he was President for 8 years preceding the 2008 meltdown and did nothing to regulate derivative trading. Bush has stated that deregulation was one of the core tenets of his political philosophy."

After reading this book I came to the conclusion that Wall Street and the financial wizardry it took is complicated for a layperson and in order to make profit one needs the advice of a good financial advisor.

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