Andrew WhiteI was lucky enough to read two books over the Holidays. One I recommend; the other I don’t. :
Boeing versus Airbus: The Inside Story if the Greatest International Competition in Business, by John Newhouse, 2007, Knopf. Too often Newhouse leaves the logic of a chronological analysis of the story and focuses instead on several mini-stories. Each takes us to a near conclusion (examples including the impact of outsourcing, engine supplier competition, impact of the defense industry etc.) and then wraps it all up in the last few chapters. I would have preferred a book that follows the natural time line since that is in fact what we observed. However, if Newhouse had done this, the book would have been a lot shorter: The truth is that he repeats himself numerous times and that ensures a bigger book and less clarity in the arguments. There is a story to be told here (not unlike that in The Death of Detroit) but it is hard to find. There is a ton of good stuff concerning US versus European politics, and the death throws of the US commercial airline industry (much better covered in Hard Landing), but overall I was bored, waiting for the nuggets regarding Boeing versus Airbus. I would suggest you start at chapter four, and then breeze through to chapter seven and focus on from there. Or just read Hard Landing, a previous recommendation of mine. 3 out of 10.
Now, the book I do recommend: Bear Trap: The Fall of Bear Sterns and the Panic of 2008, Bill Bamber and Andrew Spencer, 2008, Brick Tower Press. Bamber was a senior managing director at Bear Stearns and this book represents one inside view of what happened in a week at Bear Stearns. This book reads like a movie; fast moving, thrilling, troubling, thought provoking, full of shady characters (or what passes for shady behavior), rumor, gossip, and massive market swings. I remember watching CNBC that Thursday and Friday when Bear Stearns fell; I remember watching employees leave the HQ building late Friday with boxes under their arms: this books explains what many of those employees had seen, and felt. I read this book in a day, and I have to tell you that the feeling I am left with is sour. Bear Stearns could have survived; the Federal Reserve opened up the lending window (that saved many other banks and insurance firms) just a few hours after “allowing” Bear Stearns to hang from the gibbet and sign a deal with JP Morgan. The Fed’ could have opened the window sooner – they didn’t: the Fed’ wanted an example for the market. But the harrowing part of the narrative concerns the search for the trigger of why the run on Bear took place at all. One part of the story was fascinating: a CNBC report on Wednesday referred to a loan that apparently had been turned down (the previous Friday) even though the loan had been approved recently after the original request. But, because the story came out on Wednesday after rumors of liquidity had surfaced, the “new” news seemed to contribute to the negative mood of the moment. I was reminding of the causes of World War One, where delays in communication between nation states meant that it took too long for key information (such as the downgrading of military readiness) so that armies were set in motion even as the “enemy” was stepping down, only to cause the peace to become ever more war like: WWI could have been stopped if perfect information had been more widely available and timely. Perhaps Bear Stearns could have survived if correct information was more available and timely. But, the fact is that the early part of the book describes some of the key components of the credit market that causes the entire financial crisis we see playing out today. My last thought after reading the book: There was no one single factor that triggered the recent economic blight, but several. Sure, the US government at the time did encourage home loans to families that could not afford it; and sure, the credit markets had become so confident in understanding the market their new instruments became ever harder to understand. It was, in truth, a perfect storm, and not an event caused by one person, party, or event. 10 out of 10.
Comments Off
Category: Competition Economy Tags: Competition, Economy
