The last section of the book containing the said chapters is both thought-provoking and insightful. These chapters cover the course of decline of LTCM (Long-Term Capital Management) from its heady days of exponentially growing profits, customer base and stock prices. This section of the book encapsulates the systemic causes that precipitate financial crises and stock market collapses with predictable recurrence. At the same time, author Lowenstein takes cognizance of how individual businesses are agents that trigger such crises.
Roger Lowenstein throws light on the human psychological factors behind the bankruptcy of investment firms. The dubiousness of capitalist adage ‘greed is good’ is questioned by the author. Often, behind most financial market collapses is the unsavory and unwarranted history of excessive leveraging of capital by investment firms. Tied to excessive risk taking is the phenomenon of neglecting systemic risk. In other words, since most banks and . . . Read More