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On the minus side, the book is not particularly well documented (in terms of, for example, the graphs and the sources of the data) and some chapters seem suspiciously like lecture notes, hastily adapted to a book format. Still, an enjoyable trip to the dark side of financial market.
The author explains very clearly what happened.
The municipality, through its treasurer, speculated that interest rates would stay the same or fall. Into the bargain, he leveraged his position with a factor 3. The means for the speculation were repos on bonds.
When the interest rates went through the roof (from 5,25% to 8% = + 52%), the value of the collateral (the bonds) for his position fell (with a factor 3). He got a margin call, but couldn't pay it. The biggest part of the investment (held by FBCS) was liquidated with a phenomenal loss. Only Merrill Lynch didn't cover their position.
The author gives excellent explanations on some very specialized investments like reverse floaters and other high tech financial operations of which the value can only calculated by partial integrals.
Food for investment bankers.
From this book, we learn that Robert L. Citron was head of a large portfolio, had no oversight, and an inflated ego. His superiors and fellow investment participants (such as the county school district) knew full well what he was doing, but allowed him to continue unsupervised because of his past stellar performance- much of which was due to pure luck and favorable market conditions. We also learn that Citron, much like Nicholas Leeson, the orchestrator of the fall of Barings, was a financial neophyte. While on the one hand believing that he was fully invested in bonds, Citron had taken a heavily leveraged position in very exotic derivative securities, proving to Jorion's point that he really did not have a clue as to what he was doing.
We also learn that Citron (nor the people above him and his investment participants), who had no real background in finance, did not know the difference between market price and face value, nor did he know the difference between an option on an asset and the outright ownership of an asset. Based on one very bad bet on the movement of interest rates, Citron fully invested Orange County's finances in derivative securities that he did not understand at all, and compounded the problem by leveraging his position (basically using a little money to borrow a lot of money) to the extreme.
After reading this book, those of us who believe that our investments, from the retirement funds managed for us by fund advisors and our places of work to our bank accounts and our kids' education funds, are safe should have our heads examined. People such as Citron were not financial gurus, that is certain, but as the more recent derivative led failures at hedge fund Long Term Capital Management (which included the two Nobel laureates who literally wrote the book on derivative pricing on its stellar team of rocket scientists) and Bank of America demonstrate, no one is truly safe.
This book is split into sections of:
-Weird Weather
-Castastrophies Big & Little
-The Violent Earth
Along with paragraphs explaining each odd event, (almost) every page has a "Laugh Line" or "Didja Know." I encourage you to get this book, filled with fun facts.
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Framed by the story of Unsoeld's eventual demise in an avalanche on Mt Rainier, the centerpiece of the book is the detailed narrative of a fateful ascent of Nanda Devi, India's tallest mountain, by a group of elite climbers. Roper carefully dissects the tensions that emerge from Day One of the expediton between the hard-charging, summit-oriented alpha males of the pack and those sympathetic to the transcendental, growth-oriented perspective of Unsoeld. Included among this latter contingent is Devi Unsoeld, who was named after this mythopoetic mountain, and tragically becomes, or merges with, its resident goddess.
Roper's writing is crisp and nuanced, and he is able to bring an immediacy to events he has reconstructed from multiple and often contradictory or sanitized versions of events. Within the first chapters, I felt as though I were in the tent debating whether an ill member of the team, and thus potentially the weakest link (it does not help that this particular climber is also a woman)should make the trek or head back to base camp.
Roper tells not only the outward bound story of a mountain-climbing expedition but also draws us within the psyches of the characters, explicating the motives behind this most enigmatic of human undertakings.
I would urge readers to go out any buy this book before the Spring thaw.
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a galaxy girl, yes many of these songs are from "chuckie's new mommy" rock wich is currantly now avalible the tape features these three schoolhouserock adventures "science rock,grammar rock,and money rock" the program also contains the"I'm just a bill" music video preformed by deluxx folk implosion
avalible from WaltDisney home entertainment takes 90 minutes and was made in 2002.
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Overall, this book was a little too advanced for my soon-to-be three year-old cousin. Be sure to buy this book for a child who's older, because it's not a hardcover book (a little one will rip this easily) and it might be a little difficult for a toddler to interact with the story.