Lounge Ghosts of Manhatten

Ghosts of Manhatten is kind of a sappy love story. But the background is Manhatten and security traders leading up to the 2008 financial meltdown. The novel was written by Douglas Brunt, the husband of Megyn Kelly of Fox News. Its worth the read just to get the facts of what was going on leading up to the meltdown. This is the best account I've ever read. Here is a passage from the book:

The year is 2005. Freddie is an accountant fired by Bear Stearns. Nick is a securities trader at Bear Stearns.


Meet me at the deli on the corner of 56th and 2nd ASAP. I'll be waiting inside.
F.C.

Freddie has lost his damn mind. I put the page in the phone book and fold it up. I'll throw it away in a trash can outside the building just in case there's a legitimate reason for this idiocy.

It takes me about ten minutes to get to the deli....Freddie isn't there. I go to leave and Freddie appears, blocking the door on his way in.

"Hey, Nick. Sorry. I wanted to see you go in first."
"What the hell is going on?"
"Let's move to the back of the store first."

I let Freddie pull my sleeve. This is to weird to argue about yet.

"Bear Stearns has had me under surveillance."
"You're nuts. Don't be a moron."
He pulls out a tiny piece of plastic.
"What's that?"
"A bug. A listening device that I found in my apartment after they fired me."
"Thats crazy. They would never try to pull something like that."
"Sure they would. They just hire a PI to do it for less than five grand."
"You better be careful about what you say then."
"It's late for that. There's more."
"What?"
"They sent me a photograph."
"Of what, Freddie?"
"It's a compromising photo of me."
"Sex?
"Just before. But I'm meant to assume they have photos of that too."
"So what? You should be pounding the table.You're not married so good for you."
"With a man."
"So what? Screw them."
"I can't have that find its way to my mom and dad. I can't even imagine that."
"I really feel sorry, Freddie."
"Did you read my full report to Dale?"
"No."
"I want you to understand exactly what happened. What the report means. They think you understand it anyway."
"Are you putting me in danger?"
"I think you're okay. At this point, having the information will protect you. Several people are already saying what I've been saying. Some hedge fund guys, even a senior trader at Deutsche Bank is saying anyone holding these positions is screwed. The only thing Bear cares about now is no one can point to a person inside Bear who was saying early on that Bear had the facts and knowingly pushed around toxic securities. That way they can just claim stupid instead of evil. I think either one is criminal but they'd prefer stupid."
"Fine, go ahead."
"Then guys like the one you work for get involved. They take all these loans, bundle them into a security and claim the diversity of a thousand loans or so makes the overall security of a higher quality. Nobody actually looks at the individual loans within the security, but if you do, you see the security is going to be a mess. Normal default rates are two to three percent. If ten percent of the loans were to default the security would blow up. If anyone actually does the analysis, they'll see these are geared for forty percent default rates. The worst is yet to come. So far you have lenders making bad loans because they're greedy and short sighted. Then you have banks packaging bad loans together and selling them because they are greedy and short sighted. Finally you get credit default swaps. These are so complicated, it took awhile for me to understand but they're basically like insurance and allow two things. First, people who have positions in these mortgage securities that tie up their need for collateral will buy insurance for the cheap on the securities so they free up more collateral for more leverage. The second thing is more interesting. It allows people to make a bet against the mortgage market. Right now, for about a hundred grand, I can buy insurance on a hundred million dollar security. If it fails-when it fails-for hundred grand bet I get payed a hundred million. There are a bunch of hedge funds catching on to this already. And the guy at Deutsche Bank too. Part of the reason that this can happen is the guys at Moody's and S&P are asleep. They should be rating these securities as high risk, but they're putting A ratings on them. These may be the worst idiots of all."
"What am I supposed to do with this?"
"Nothing for now. There are a few people who know all this, but mostly people who refuse to believe it."
"Like Dale?"
"Yes. One more thing. You're sitting on a time bomb. Most of the bad loans started early this year. These loans typically had a two year teaser rate on the interest. At the end of two years, the real and much higher interest payments kick in. I'd say around May 2007 the bomb goes off. Things won't be the same around here after that. You should be prepared.
"I'm sorry, Freddie?"
"I just need someone to know. It doesn't matter if its just one person. I just needed someone to know the things I've told you.
"Okay, Freddie."

Ghost of Manhatten is a work of fiction. But Doug Brunt gives us a birdseye view of what the hell was going on in Manhatten leading up to the meltdown.

 

"If you lend money to one of my people among you who is needy, do not be like a moneylender; charge him no interest." Mosaic Law.

One could almost make the case that cheerleading for banks versus individuals is, well, antisemitic. But I suppose the Law applies only for "one of my people." It's okay to gouge the non-Jews.

 

From everything I've read, per Church doctrine Christians were not allowed to charge other Christians interest on loans. Jews did not have the same restriction. So if a Christian needed a loan he had to go to a Jew.

In my opinion, this was the foundation of the irrational hatred of Jews that has persisted for centuries.