Book on the Way

After a long hiatus, I’m back.

I worked on a very interesting project to hedge commercial real estate while I was gone – a project that the market needed. Sadly, complacence and the pressure of “money to be made” took over and the new hedge product didn’t get implemented.

‘Twas ever thus.

When Wall Street is making tons of money doing something, the various companies on the Street all crank up the volume as much as they can. Everyone who has the skills and specialized knowledge to execute the “hot” business is working flat out, and new people are being trained as quickly as possible. Each firm thinks it can do a bit better than its competition. Better means more profits, more volume, and strangely enough, lower risk. They can’t all be right, but don’t try to tell them.

My book will be different from the others on the crisis because it will show how the people who drove that extraordinary volume ($600 billion of new subprime mortgages per year at the peak) felt they were personally not going to pay a terrible price for taking on such large risks. Come to think of it, they were right.

The terrible price was spread to everyone, especially to homeowners across America.


6 Responses to Book on the Way

  1. Bruce says:

    The price was also spread to taxpayers and in addition created horrible moral hazard. Although we’ve been well on the way to cronyism for along time.

    • hhill51 says:

      I know…

      The place where you have to watch out for moral hazard is with the truly amoral (corporations)…. I simply don’t believe anyone who has personally been through a foreclosure or short sale would ever go out of their way to get in that situation again.

      On the other hand, the companies that offshored their profits and got that huge ($100 billion if memory serves) free pass in the amnesty of 2005 already had piled up another $200 billion offshore by 2010, and were getting their pet politicians to push to do it again…. Their sock puppet Senators actually managed to say it would help create jobs in America, even though those same companies employed fewer people in America by 2010 than they had in 2005.

      What a scam.

  2. Victor Shinsky says:

    Good for you, Howard! When is it expected To be out?

    Sent from my iPhone


    • hhill51 says:

      I hope to have it ready in a month or so.

      The conventional publisher I spoke with wanted to turn it into a business school textbook with more formulae and fewer stories from the Street. I want ordinary people to understand – both the technical intricacies of securitization and the way people in the business make decisions as a group – so I think the story isn’t complete without telling how the financial engineering works and how the players in the game behave.

  3. koachkaren says:

    Looking forward to the new book.

  4. Debbie says:

    Congratulations Howard! Hope to meet soon for Lunch! Debbie

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