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<\/a>that the U.S. economy was in beautiful shape. Unfortunately, it was Morris who turned out to be right.<\/p>\nIn his foreword, the author treats us to a simplified account of the credit bubble. \u201cNot long ago,\u201d he writes, \u201cthe sum of all financial assets \u2013 stocks, bonds, loans, mortgages, and the like, which are claims on real things \u2013 were about equal to global GDP. Now they are approaching four times global GDP.\u201d He likens this situation to an inverted pyramid, which becomes more wobbly as you pile on more claims. \u201cAnd when large, wobbly objects tumble, they go very fast.\u201d<\/p>\n
In this volume deemed a Notable Book of the Year by The New York Times<\/em> and a Best Book of 2008 by The Economist<\/em>, Morris explains for the layman, in crystal clear prose, what got us into this Great Recession. Or maybe we should say what Morris predicted <\/em>would cause this Great Recession, since he wrote much of the book before the market crashed.<\/p>\n Morris himself is a former lawyer and banker. In fact, he ran a company that built the software that enabled bankers to create the sophisticated credit instruments that landed us in this mess. He was dismayed by what bankers were doing with his software. “This is crazy,” he said in a 2008 interview with NPR. “I was sure that people weren’t keeping track of the trends so they had proper margins and collateral and so forth.” The credit instruments were too complex and the volume of trading too high to realistically gauge the risk. The inverted pyramid eventually tumbled.<\/p>\n There is hope, Morris claims, but only with increased regulation of the financial markets. And only if American consumers, too, can curb their tendencies to spend with so much borrowed cash.<\/p>\n