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496 pages, Hardcover
First published January 1, 2010
For a trader like Paul Jones, the worst thing was that he was trapped in these positions. When he speculated in futures, he always knew he could turn on a dime; indeed, he never created a position without put- ting in a “stop” that would take him out if he began to suffer losses. But the emerging-market loans were utterly illiquid: After Lehman declared bankruptcy, nobody wanted to hold any loans at any price, so there was no way to get rid of them. “I realized that our emerging-market trading book was going to get absolutely hammered and there was nothing I could do about it. . . . That was the worst moment of my whole life,” Jones said later. In his anguish and his helplessness, he thought back to what he had read about the only disaster that approached this one in scale. “I used to always think, ‘Holy cow, how’d these guys in 1929 lose it all? How could anybody be so boneheaded? You’d have to be a complete moron!’ And then that day, I thought, ‘Oh my God. I see how these guys in ’29 got hurt now. They were not just sitting there long the market. They had things that they couldn’t get out of.”
“The visitors reveled in the Arctic wilderness, pitting their wits against powerful salmon; and with the instinct that wealthy people sometimes develop, they resolved that sine they liked the camp so much the right thing was to buy it.” (p. 189)
“It soon became clear that the regulators had no concrete ideas on how to stop imploding hedge funds from damaging their creditors; and in the absence of an action plan, they resorted to plan B - assert that no action is needed” (p. 193).