Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives

by Satyajit Das

PRODUCT DESCRIPTION Warren Buffet once labelled derivatives “financial weapons of mass destruction”. Unlike the military kind, financial WMD are not hard to find. Many great companies use them. These businesses use derivatives to make money or protect them from risk. It’s a simple case of greed or fear. Or is it?

In derivatives, whoever you are, there are things that you don’t know that you don’t know. These are the real risks of derivatives. They’re generally left to the client to discover. So, if you’re entering the dazzling world of derivatives, ask yourself this: What do I know? What do I need to know? What don’t I know? What am I doing?

Traders, Guns & Money
throws light on the culture, games, and pure deceptions played out every day in trading rooms around the world, and played out with other people’s money. It describes the processes by which a small group of gifted, if avaricious, individuals parlay their knowledge of the arcane world of financial products into wealth, leaving shareholders, clients, regulators, and the tax paying ordinary public to bear most of the risk.

EDITORIAL REVIEWS "A must read for all CEOs, CFOs, Bankers and anyone who cares about what banks are doing with their money." - Finance Asia, May 2006

"... a scalpel of a book" - Financial Engineering News, July 2006

"Das is especially good on structured products and on the recently fashionable world of structured credit... a diverting read" - Financial World, July 2006

CUSTOMER REVIEWS I read an article by the author, Satyajit Das today. In the article he mentioned that "1 dollar supports 20-30 dollars worth of loans" and that the derivatives market at the moment is valued at 485 trillion dollars, or to make that a little more understandable, 8 times the global gross domestic product. 8 times the GDP of the entire planet. Wow.

This book is a great introduction to the world of derivatives and I highly recommend it. -Jaronimo (Sept.07)

>JA Ramsey says: Seems like the Fed Reserve, SEC and Treasury Secretary should have read this book BEFORE this mess made a $700B bailout necessary!! any comments? (Sept.25-08)

>Jaronimo says: That's absolutely true. They let these guys run rampant and and everyone knew from the start this would be an issue, they just all figured they would repackage it and sell it before the music stopped so some other sucker is left holding the bag.

The funny part is these guys are supposed to be financial geniuses, and are supposed to be looking out for their customers, but they screwed them to make a few bucks on products they didn't fully understand. I am all for free markets and buyer beware, etc. But these guys purposely made these packages so complicated nobody could understand them, even the guys selling them, and people are suckers, so they bought them.

I think people need to be put in prison for this mess. (Sept.27-08)

This is not another journalist musing on the financial world. This is not an academic explanation of how financial instruments work. It's something else entirely -- a rare inside glimpse into the world of derivatives by a literate professional who's been a handshake away (or closer) from the major events in the market. Das leavens a series of technical discussions about particular strategies with more entertaining glimpses into the culture the drives the deals. Although I have bones to pick with the book's episodic structure, I can't think of a better way to get a crash course in how the capital markets really work. -Joe Kolman (Nov.06)

Just enough quantitative stuff to be dangerous, and enough humor and anecdotal info to make this a page turner from start to finish. -The Cranky Consumer (Mar.08)

I picked up this book after finished reading David Roche's New Monetarism. What a GEM!!!! First of all, of all the economic commentators on the scene, nobody, I repeat NOBODY got it right about the cause of the current U.S/W.Europe economic problem (hint: subprime is NOT the cause). David Roche's New Monetarism accurately pointed out "derivatives" which created the asset bubble is the cause of our present economic turmoil. Problem is, David Roche's New Monetarism can be difficult for most reader to follow unless you were part of the "landscape" of the derivative industry. For example, concept like Yen Carry Trade or CDS (Credit Default Swap) were flying in and out in New Monetarism without detailed explanation or definition. Readers may be left behind without truly getting the education they deserved. However, in Guns, Traders... Mr. Das used common English to explain to the readers the basic concept of the complicated derivative industry, he even went on to provide math formulae and swap structures. I am just so thankful to Mr. Das for doing this. The title of this book may give a wrong impression that this is a sexy tabloid writing, less economic and more "National Enquirer" (nothing wrong with National Enquirer as I consider they are a better newspaper than New York Times). This is a serious finance book about capital markets, be prepared to study some maths and financial fundamentals. For capital markets professional, especially those with an experience in derivatives, this book brings you extra joy as you felt like "hey! I was there!!!". For regular reader, this book allows you onto the trading floor, the sale call conference and even place you in front of the computer screens of structuring specialists. If you read David Roche's New Monetarism and did not understand many of the concepts, this book is a must. However, this book is studying derivatives at the ground level, micro economic level. You still need to go back to David Roche's New Monetarism to get an understanding from the Macro, 50,000 feet level.

Finally, allow me to make one political comment. The present economic problem in U.S. has nothing to do with mortgage or subprime. There is nothing the government, federal or local can do. Just like your dying of aging the government cannot do anything to "fix". McCain and Obama may be making a lot of political statements as how to "fix" this economy, the reality is, the economy is way beyond the government's ability and "intellect" can deal with, this book offer the reasons. -jason francisco (Sept.08)