Todd mentioned on Monday that Borders' business-book buyer listed George Soros' The New Paradigm for Financial Markets
as a book he'd recommend for the credit crisis. We have posted an excerpt
of that book on our excerpts blog
I recently finished the book myself, and would agree that it helps explain the crisis we're in, or at least the second half does.
The first part of the book, as Soros himself states, he devotes to "the theory of reflexivity, which goes well beyond the financial markets" and goes on to suggest "People interested solely in the current crisis will find it hard going, but those who make the effort will, I hope, find it rewarding." I would say that it certainly was, though if you're interested only in the credit crisis, and not the "Autobiography of a Failed Philosopher" as he titles Chapter 2, you can skip straight to Part 2 of the book.
To get the book started, Soros includes an introductory chapter called "Setting the Stage
" which is what we were lucky enough to obtain for our excerpts blog. You won't find a more concise explanation of how the credit markets ended up where they are.
As one of the most successful financial speculators in the world, Soros has a deep understanding of markets. In his outlook for 2008 at the end of the book, he even presciently states "Eventually, the U.S. government will have to use taxpayer money to arrest the decline in house prices. Until it does, the decline will be self-reinforcing, with people walking away from homes in which they have negative equity and more and more financial institutions becoming insolvent..." If this kind of thing interests you, I'd highly recommend the rest of the book.
Here is the direct link to the excerpt.