When Genius Failed

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When Genius Failed
The Rise and Fall of Long-Term Capital Management
LC Class
HG4930 .L69 2000

When Genius Failed: The Rise and Fall of Long-Term Capital Management is a book by

derivative contracts, in order to avoid a panic by banks and investors worldwide, the Federal Reserve Bank of New York stepped in to organize a bailout
with the various major banks at risk.

The book's account is largely based on interviews conducted with former employees of LTCM, banks involved in the rescue, and the Federal Reserve.

BusinessWeek as among the best business books of 2000.[2]

Overview

The book tells the true story of the bailout of

Myron S. Scholes and Robert C. Merton also joined the new firm, and would win Nobel Prizes while at the firm. Using its computer models, the firm's fund in 1995 and 1996 brought in a massive 40% in returns to investors. With easy access to debt funding due to lenders' perception the fund was low risk, the firm expanded exponentially, with its positions amounting to 30 or more times its capital at one point.[6]

In 1998, volatility in the market resulted in LTCM beginning to lose $100 million per day.

derivative contracts, in order to avoid a panic by banks and investors worldwide, the Federal Reserve Bank of New York stepped in to organize a bailout
with the various major banks at risk.

The feds "invited"

Salomon Smith Barney, to the Fed's board-room in New York on September 2, 1998. They were also joined by the chairman of the New York Stock Exchange and the representatives of several banks in Europe.[4] The investment banks were invited to enter a consortium to fund the bailout of LTCM.[5] The Federal Reserve raised $4 billion from investment banks and commercial banks to stabilize LTCM in September 1998.[3] The group "bickered and backstabbed," according to Lowenstein, but in December 1999, the bailout was complete and the firm was again functioning under a new name.[6]

Major characters

Major characters include a number of executives in the American banking industry.[4]

Writing process and publishing

The book's account is largely based on interviews conducted with former employees of LTCM, the six primary banks involved in the rescue, and the Federal Reserve, as well as informal interactions by phone and e-mail with Eric Rosenfeld, one of LTCM's founding partners.[1]

It was released Sept. 15, 2000.[6] As of 2014, there had been four editions in English, five editions in Japanese, one edition in Russian and one edition in Chinese.[7]

Reception

The book received numerous accolades, including being chosen by

BusinessWeek as among the best business books of 2000.[2]

Publishers Weekly gave the historical coverage a positive review, but also wrote that the author "obscures his narrative with masses of data and overwritten prose."[5]

New York Times, reviewed the book positively.[3] Writes The Wall Street Journal, the book is a story of "hubris and financial peril."[8] Kirkus said that "with a lucid style and a sense of humor and amusement, Lowenstein guides us through the thickets of high finance in the computer age."[6]

References

  1. ^ a b Lowenstein, Roger (2011). When Genius Failed. Random House. p. xi.
  2. ^ a b The Best Business Books of 2000
  3. ^ a b c d Norris, Floyd (2000), More Was Less and Less and Less, The New York Times, retrieved 1 April 2024
  4. ^ a b c Lowenstein, Roger (2000), When Genius Failed - The Rise and Fall of Long-Term Capital Management ISBN: 0-375-50317-X, The New York Times, retrieved April 1, 2024
  5. ^ a b c When Genius Failed: The Rise and Fall of Long-Term Capital Management - Review, Publishers Weekly, 2000, retrieved 1 April 2024
  6. ^ a b c d e f WHEN GENIUS FAILED THE RISE AND FALL OF LONG-TERM CAPITAL MANAGEMENT, Kirkus Reviews, 2000, retrieved 1 April 2024
  7. ^ When genius failed : the rise and fall of Long-Term Capital Management [WorldCat.org]
  8. ^ Heard on the Street Recap: When Genius Failed, The Wall Street Journal, 2023, retrieved 4 April 2024

External links

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