Book Review James Grippando's "Money to Burn"

Book Review: James Grippando’s “ Money to Burn” a Wall Street must read!

This book was humorous (it needed to be), fast paced, action packed and simply an easy, enjoyable read.

The hero, Michael Cantella is a golden boy, a rising star on Wall Street working at Wall Street’s investment bank, Saxton Silvers. He discovers on his 35^th Birthday that his entire portfolio, everything he has worked hard for... several million -  has disappeared … he has Zero…. On the brink of bankruptcy, Michael has to find out how it happened, why it happened and who did it! People are getting murdered along the way, his wife wants a divorce, and everything seems to point to the disappearance of his first wife whose body parts were found inside a dead tiger shark in the Bahamas…  4 years earlier. Good book…. I took the liberty of writing out a short glossary of terms that the hero refers to within the book.. some I knew, some I didn't!

“NINA Loans ‘ No Income- no Assets.. Unscrupulous mortgage brokers brokered loans to people who were not eligible, selling perhaps multiple properties with no money down , low credit scores - knowing these people would be defaulting based on what they earned…. And knowing beforehand that unless the properties increased in value allowing them to sell and ‘flip’ the property obtaining a profit, their loans were doomed. All that was required was to find the appraiser who would value the property more than the loan, and that was that. The bank would borrow at a high ratio to capital, then bundle the sub primes together and then sold them to the Wall Street Investment Banks. Once the loans were sold, everyone down the daisy chain made their money…a ponzi scheme….just passing the hot potato… This continued until the Wall Street firms decided against buying the NINA loans due to people defaulting on them amongst other things.. Then it all started to collapse..

CDO - collaterized debt obligation . A CDO is simply a promise to pay cash flows to investors in a prescribed sequence, and if the cash flow is not there to pay that cash flow, then the lowest of the ‘tranches’ (slice - think of the CDO being sliced together from mortgage backed securities ) suffers the losses. Global investors were partaking in the CDO’s, and many of the assets - which offered great rate of returns compared to the traditional and ‘safe’ investments say on a T-Bill were too tantalizing for too many people. Since many of the CDO’s were subprime mortgage backed bonds, once the subprime mortgage crisis was upon us, the Global investors stopped funding the CDO’s in 2007.

Long on stock… traditional purchasing of a stock, wait for it to go up in price and then you sell at a profit.

Short Selling - you sell high and then buy low…. You borrow the stocks, selling it immediately at the higher price with the understanding that at some point in the future you must give back those same number of shares to the broker who loaned them to you… If all goes well then the stock goes down, the short sellers buy at the low price, and then gives back the cheap shares to his lender.. He pockets the difference in price as profit… If the stock does not go down.. He has to cover the difference to the lender .. And loses money.

Naked short sellers - If you have not borrowed the shares to begin with, it is called naked short selling. It isn’t illegal. They must, of course, have a reasonable expectation that they will be able to obtain those shares before selling them…Investment banks are able to discover where these shares are with special programs, and therefore can offer them to investors who wish to go short. Hedge Funds borrow shares all of the time, and it was a very lucrative activity for investment banks. The abuse we have read about is where there aren’t the shares available to produce at the time of selling them....

I found the book to be so topical what the Wall Street demonstrators, etc.. There is truth in what they are demonstrating over... I just have a strong aversion to the anti-Semitic rhetoric I have heard, and the hippie party atmosphere making it into something it isn't....

BUT, read the book!  Published in 2010