So, maybe you’re curious about what books people are reading right now. I’ll start with new fiction. There’s a lot of interesting new books out there right now. The book that everyone is talking about remains The Fortress of Solitude by Jonathan Lethem. Lethem has recently been interviewed in periodicals ranging from Entertainment Weekly to the Paris Review, and the book is the current pick for countless book clubs. Despite the hype, this book is a worthy read, and you’ll have something to talk about at cocktail parties. In the category of science fiction for those who don’t typically read science fiction comes Quicksilver, the first book in a new series by Neal Stephenson. The book has been out for a week and is already flying off the shelves, most likely to the very same folks who are always telling me how much they love Stephenson’s previous novels, especially Snow Crash and Cryptonomicon. Meanwhile, Zoe Heller is nearing breakthrough status with her second novel What Was She Thinking?: Notes on a Scandal, which is about a teacher who carries on an affair with her fifteen year old student. It sounds trashy, but from what I hear it turns out to be a nuanced and moving character study. It’s been short-listed for the Booker Prize and is beginning to sell accordingly. Also short-listed and selling incredibly well in England is Brick Lane by Monica Ali. Following in the footsteps of fellow young Londoner Zadie Smith, Ali’s debut novel is another unsparing look at multi-cultural London. Finally, another debut, this one is a cleverly wrought time traveling romance by Audrey Niffenegger titled, appropriately, The Time Traveler’s Wife. So there you go. A few things to read this fall. Stayed tuned for the next installment: new non-fiction.
Last week, Max directed our attention to a major new piece of reporting on the financial crisis: a Portfolio article by Millions favorite Michael Lewis. The author of Liar's Poker, among other books, Lewis is a gifted explainer of an industry badly in need of explanations. In the Portfolio piece, for example, he immerses us in the world of short-sellers who saw the subprime meltdown coming. However, the key paragraph - wherein trader Steve Eisman has an epiphany about how investment banks are leveraging subprime bonds - resorts to a sports metaphor, and thus fails to demystify an elusive instrument at the center of the financial crisis: the credit default swap (CDS)."When a fantasy player drafts Peyton Manning, he doesn't create a second Peyton Manning to inflate the league's stats," Lewis writes.But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. 'They weren't satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn't afford,' Eisman says. 'They were creating them out of whole cloth. One hundred times over! That's why the losses are so much greater than the loans.'I've heard financial insiders inveigh against peons who "don't know a credit-default swap from a turnip," but how are we to wise up, if explanations only come in the form of metaphors (athletic or agricultural)? Grabbing a fig leaf from the N+1 playbook, as it were, I decided to ask a friend in finance to explain the Peyton Manning analogy, as simply as possible. Here's what he had to say (wait for "the rub"):Assume the following: Eisman buys a crappy mortgage security (say, a $1,000 bond from a mortgage given to a strawberry picker who makes $14,000 dollars per year). Say the mortgage rate the strawberry picker pays is 15%. This means he's agreed to pay $150 a year to Eisman. But Eisman is worried that the strawberry picker will default because the guy's house value has collapsed and his income is drying up. Thus, Eisman wants to buy insurance on the $1,000 he's loaned. The way he does this is via a credit default swap.A CDS is essentially an insurance policy on a loan, and here's how it works. Eisman finds a counterparty willing to sell him insurance on his loan (a big investment bank like Lehman Brothers). Eisman agrees to pay the bank a fixed rate every year for protection of the mortgage security he owns (the crappier the loan, the higher the rate). Let's say for the $1,000 loan to the strawberry picker, his rate will be 10%. The bank pays him nothing on a regular basis, BUT, if the borrower defaults, they pay him the full $1,000.So: if times are good and everyone makes payments on time, the payments are structured as follows: The strawberry picker pays $150 per year to Eisman; Eisman pays $100 per year to Lehman (which then uses some of the cash to provision for losses, and uses the rest to make more loans). The strawberry picker gets to keep his house, Eisman keeps $50 per year (loan payment from strawberry picker minus the insurance premium he pays to Lehman), and Lehman gets $100.Got the structure? Now here's the rub.Imagine Eisman never actually had exposure to the loan in the first place. Being the brilliant skeptic he is, Eisman would never lend $1,000 to a strawberry picker with little income. He thinks that strawberry man is doomed to default on that loan, and he actually wants to bet AGAINST him. So instead of giving the loan and buying insurance, he just buys the insurance (hence the often used and rarely understood term "side bet"). To do this, Eisman still has to pay the "premium" for the insurance he's bought, and since it's a risky loan, the rate is high (e.g. $100 per year in the example above). [Though he stands to win $1,000 if the loan defaults.] In effect, Eisman is paying a "subprime-like" interest rate to Lehman every year! That's what Lewis was getting at.I would have used a different metaphor. I would have said it's like a New Yorker buying a bunch of home insurance policies in New Orleans because you are expecting that there will be a massive hurricane coming to wreck them. Now lets say that the insurance company took the money you were giving it, didn't provision for the coming doom, and instead, used that money to lend to more people building and buying houses in New Orleans.That's leverage upon leverage upon leverage. And that's the mess that is unraveling before us.
It's been hard to watch the news the last couple of days. I've been interning with chicagotribune.com this summer, so, since Monday, I've been pretty immersed in what's been happening on the Gulf coast - as immersed as one can be, I suppose, with out being actually immersed. Judging from the light traffic this blog has gotten over the past few days, I'm guessing most folks have been spending their online time reading the news, as I have. Aside from the major news sources - CNN, etc. - here's what I've been refreshing many times a day: the WWLTV blog, the Times Picayune Breaking News Weblog, The Irish Trojan's blog, and The Interdictor. It's amazing how much all the blogs out there have enriched the coverage of this catastrophe. It's a great time to be a news consumer.But you may, like me, also need a diversion from the news. Luckily, my favorite New Yorker of the year has just arrived at my doorstep: The Food Issue. I can't wait to start reading it. Other diversions:The Chicagoist is giving away three books to promote Picador USA's 10th anniversary event at the Harold Washington Library in ChicagoI might have to try this: Library Thing is a Web site where you can catalog your library. You can tag the books by subject, and the system pulls in Library of Congress cataloging data. Free for the first 200 books and 10 dollars for a 20,000 book limit. (via H2O)Bookfinder.com, the ultimate Web site for tracking down hard to find books, has released their latest list "of the most sought after out of print titles in America."
After more than a month of intense reading I've finally finished Crime and Punishment by Fyodor Dostoyevsky. As some of you may remember from a post a while back, this was my first serious excursion into the golden era of 19th century Russian fiction. After seeking the advice of several trusted fellow readers (aside: see how well it works! Make sure to Ask a Book Question if you ever find yourself in a similar predicament. We're here to help!) We collectively decided that C & P was the best place to start. I reacted to the book in a couple of different ways. My first reaction, from almost the very beginning, was that the book felt like a Dickens novel to me. I saw similarities in both the gothic overwrought characters and the lurking shady characters who alternately seemed for or against young Raskolnikov. The friendship between Raskolnikov and Razumikhin, in particular, reminded me of the friendship between Pip and Herbert Pocket in Great Expectations. Other similarities, I think, are structural. Both books were written serially, and as with Dickens, I looked forward to the cliffhanger at the end of each chapter which would ensure that readers would look forward to the next installment. When I read a book like this, it always occurs to me that it's too bad books aren't written that way any more. It seems like it would be a really fun way to read a book. (Now that I think of it, I'm pretty sure that Stephen King has experimented with this in recent years). My other reaction was how psychological and modern the book seemed. I never read this or any other Russian novels in school (not sure how that happened) so I had neither expectations nor preconceptions when I began. The book was, in its own verbose way, a very profound discussion of morality and power. More specifically, I was interested in the relationship between the power of murder and the power of wealth and social class. These themes were buried beneath layers of prose. The book seemed to be divided almost equally between action and Raskolnikov's internal monologue. It was very readable, but occasionally overwhelming. A final observation: the book is filled with events and real people drawn from real life in 1860s St. Petersburg. In the present day, as an established classic, it gives the book a historical context, but I couldn't help but think about how it must have appeared at the time of its publication. In this day and age, writers are often derided for relying too much on current events and pop culture. Critics claim the these books will lose their cultural significance as they become quickly dated. Yet, in C&P, Dostoyevsky's practice of referring to specific scandals and amusements that were the hot topics of conversation at the time serves to cement the book very specifically in a time and place and it manages to make the story feel real and complete. I should also mention that I really enjoyed the particular edition that I read. A multitude of informative notes augment the text, and the translation by Richard Pevear and Larissa Volokhonsky felt inventive and engaging. But now I am done, and I am looking forward to a change of pace. I've already embarked upon Jamesland by LA author Michele Huneven. The book club that I help run is reading it, and Huneven herself is planning to make an appearance at the end of our meeting so that she can answer our questions. Should be lots of fun.
The Millions numbers many excellent novelists among its staff. Today we reveal the cover of staffer Claire Cameron's upcoming novel, The Last Neanderthal. Following Cameron's first novel, The Bear, which was long-listed for the 2014 Baileys Women’s Prize for Fiction, The Last Neanderthal is the story of two women separated by millennia, linked by forces that will transform them both. Find it in stores May 2017.
In August, Emre mentioned In Me Own Words: The Autobiography of Bigfoot by Graham Roumieu, a very funny book - written in Bigfoot's own voice and filled with illustrations that somehow straddle grotesque and amusing. Now Roumieu has brought Bigfoot back for another book, Me Write Book: It Bigfoot Memoir, so Bigfoot fans can get their long-awaited Bigfoot books. These are certainly my most favorite Sasquatch-themed books. For more, visit Roumieu's Web site.
A week doesn't go by that there's not some new news related to Dan Brown's The Da Vinci Code. The plagiarism court case, the book's paperback release, and the book's connection to the recently discovered "lost Book of Judas" have all made headlines recently. Not bad for a book that first came out over two years ago. People wonder how the book can continue to sell so well (the paperback sold as many as 500,000 copies in its first week of release), but being on the front page of the newspaper every week goes a long way when you're trying to move product. Incredibly, with the The Da Vinci Code movie coming out in May we're actually in for another round of news about the book. Undoubtedly the movie will get tons of press, but I was particularly surprised to see that Google is participating in a special promotion for the movie. If you go to google.com/davincicode and follow the prompts, Google will add "The Da Vinci Code Quest" to your personalized homepage (assuming you have a Google account.) The "Quest" is some sort of puzzle game that officially starts on Monday and there are various prizes being offered. Now, Google has certainly morphed into a pretty big company over the last couple of years, but you don't really expect them to do promotional tie ins. Once again, The Da Vinci Code seems to be rewriting the rule book.Philipp's got more details.
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