Extreme Money – The Masters of Universe and the Cult of Risk

“Extreme Money – The Masters of Universe and the Cult of Risk “ by Satyajit Das is a book on the present day bankers. After reading this book, you would feel tempted to withdraw all your savings from the bank, or plan to be as mischievous as possible  with your bank and be a part of the robbery that  is possibly going on even now.

 Though mostly focused on US and European Banks, I think, some Indian Bankers are also waiting in the wings for such an opportunity  to emerge. The Salary of the top level of executives in many Indian banks are also sky-rocketing and it is only possible that they are just waiting to catch up with their friends abroad, who are simply mastermind burglars.

I have attended the class of Mr. Das, when he was in India as a part of Euromoney Traning’s training program on  derivatives. His understanding on the subject and mastery over financial modeling was very appreciated by his enlightened class. But this book, shows much  more than his mastery over the subject, it shows his understanding of the entire world of rogue banking. Most of the rogue bankers got scot free, except a  few in the periphery.

“The analysis shows the dizziness of spiral debt. Borrowing by US Government, corporations and individuals have reached around 350% of what America produces in a year, its GDP. Consumers borrowing at a record level, every man woman and child in the USA ( a supposedly rich country), has borrowed around Rs 4000 dollar each from their Chinese counterparts ( who are supposedly less well off ). Complex, incomprehensible, untested financial products have accumulated unnoticed, outside regulatory perview. Banks are lending money to people, who will never be able to pay them back. “

In every line and every page of the book there is insight of an insider, who reveals the real truth of high end banking, particularly investment banking.

 While reading the book you will discover what pleases these bankers, their habits and wealth, who toil hard to make their own money and not for their customers and investors. They always believed that they are so complex that no one will understand them, no regulatory mechanism can touch them and  they will go on creating this unending web of risk management theories and draw every one into their greed lock.

Sample this :

" Crime without Punishment : In 2008 hedge fund returns averaged negative 20% Even marque funds took large losses. Hedge Funds investments fell by around $ 600 billion. Over 3500 hedge funds out of 8000 ceased operation. Devaney a hedge fund manager and bon vivant with a taste for high living, lost $100 million, and was forced to sell prized personal assets, properties in Aspen, Colorado and Miami, his helicopter, a Gulfstream jet and his cherished 142 foot yatch 'Positive Carry'. "

" The brave new economy was built  on debt. Individuals borrowed to buy houses, cars, gadgets or take holidays.  They borrowed to get education, and to get healthcare. They even borrowed to save, using debt-financed investments. Companies borrowed to invest and to buy each other. They borrowed to pay dividend, repurchase their own stock. ...America borrowed in good times, because it could and borrowed n bad times because it needed to. Vice President Dick Cheney stated " Reagan proved deficits don't matter".

The sheer magnitude of neglect revealed in this book, will make you boil inside you and  you will feel like doing something about these white collar robbers.  This is also an eye opener for you, why should you keep your money in gold and other real assets, and not in bank accounts totally , however, allured you are. The housing bubble has also to be watched against, although India probably has not reached that stage as yet.

The domino effect of this rogue banking is what we are seeing everywhere, particularly Europe, who have been half-heartedly drawn into this circus.

This book is worth reading from cover to cover and should find a permanent place in your almanac.