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Type of bind: Paperback
Dewey Decimal Number: 332.024
EAN num: 9781427797414
ISBN number: 1427797412
Label: Kaplan Publishing
Manufacturer: Kaplan Publishing
Quantity: 1
Page Count: 256
Printing Date: May 06, 2008
Publishing house: Kaplan Publishing
Sale Popularity Level: 1507
Studio: Kaplan Publishing
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Product Description:
From desperate interest rate cuts and chaos in global financial markets to the sub-prime mortgage crisis and a fast-crumbling tower of public and private debt, Wall Street insider Michael J. Panzner exposes the cracks in the dike, the looming economic threats, and the vast array of promises and obligations that will ultimately go unfulfilled.
How did we get to this place, and how can we protect ourselves from the fallout?
This revised and updated edition features a new introduction by the author on the predictions that have come to pass since the book was very first published. It also provides a financial bomb shelter for every American by identifying the most pressing risks we face yesterday as well as what we can do to survive the crisis:
- How an unraveling economy will affect each one of us
- When to sell, what to buy, and where to invest as the crisis unfolds
- The social, political, and geopolitical fallout from widespread financial upheaval
Everyone must learn of the disaster-in-the-making so they can protect themselves, their families, and their economic well-being—before it's too late. Financial Armageddon is today’s call to action.
User popularity level:
Rated by buyers 
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If you think that the perfect storm is total collapse of the economic system, this is your book. Probability of everything outlined in this book actually happening? Not very likely - but one should be cautious with how one structures one's affairs... So it was for me more of a checklist - not necessarily one of impending doom.
Rated by buyers -
We are in perilous times. Now (i.e., late September 2008), we all realize it. Several years ago, virtually alone, Panzner predicted (in great detail) exactly what has now actually come to pass over the last few years, and---perhaps much more importantly, he warned us exactly what is coming in the near future.
Several years ago, he was regarded as being "an alarmist"; now, we recognize that he was (and is) a PROPHET!
I believe we all should read this book very carefully, and use it to plan for our families' futures. Buy copies of this for your friends---they'll soon be very grateful that you did.
Rated by buyers 
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I seldom buy financial books because most of them are simply print "scams". I bought this one because of the reviews and a recommendation by someone, and Mr Panzner's credentials. He certainly has the background to write a meaningful book on the subject. However, I was stunned at how extraordinarily superficial the book was, and thus felt compelled to write a review. The book takes some similar events in history and paints a potentially very scary future. And that future may come to pass, but you've got almost 200 pages of extrapolating those historical events into the future and very little else. Seems little more than an endeavor to sensationalize and commercialize what "can" and possibly will happen. There is little digging into what precipated some of the events, and the "advice" offered is really pathetic. The fact that this got such high ratings is either a testimony to how many friends he has in the industry or how ill informed and poorly read our society is. The one thing for sure is that there was indeed a wealth transfer that occured here: my wallet to his. But other than that, there is absolutely no reason to purchase this book. Given his credentials, I would have thought he would have been mildly embarrassed to pen this. He could undoubtedly do better.
Rated by buyers -
If you care about your family's future financial well being, this book is a must read. This is the second edition of the work, but Panzer made some predictions in the very first edition, written a few years ago, that have come to pass alrady. While, I hope we never see the "armageddon" that Paznzer lays out, I do believe that we are poised for a massive recession or depression due to the recent credit and houing bubbles. Panzer lays out a series of events led by a weakening dollar, national trade budget shortfalls, and credit derivative misuse that could ultimately change the face of America and our current way of life. I would also recommend "The Demise of the Dollar" as a follow on read to this work.
Rated by buyers -
1. Hedge funds are structured around a performance-based compensation system. Hedge fund advisors are paid an incentive fee based on how well they do. Hedge fund advisors get a 20 percent cut above a preset benchmark, in addition to a 2 percent fee, of the total funds under management. Many hedge funds have become comfortable using large amounts of debt to boot returns. Many on Wall Street switch sides and became a hedge fund. The goal is too generate the highest possible returns in the shortest period of time, ignoring any long-term consequences.
2. The pricing of options is dependant on time remaining until maturity, interest rates, and investor expectations on market volatility.
3. According to Towergroup, US brokerage firms expected to generate $33.2 billion from derivatives-related revenue in 2006.
4. Credit Default swaps make up the fastest growing segment of the $415 trillion derivatives market. "The credit derivative has one party making periodic payments to other and receives the promise of a payoff if a third party defaults. The former party receives credit protection." (Wikipedia)
5. Credit Default Swaps can be used to manage risk without selling the corporate bond or government bond. Credit Default Swaps are a form of insurance for banks, pensions, and hedge funds (Party A) too protect themselves against the companies they invest in against debt default.
6. Insurance is bought to protect against loss. Without insurance, if company X defaults on debt, the bond value is lost. For example, a pension fund (Party A) buys a CDS and pays a 2% premium per year broke up over four quarterly payments, payable too a derivative bank; on the books, the risk of default is eliminated by the insurance; and CDS coverage lasts 5 years.
7. Since the CDS is not tie to a physical asset it can be bought and sold. Speculation on the credit-spread works drives buying and selling of CDS contracts. Without a CDS, a third party profits by identifying, a company with weak financial performance and offers to pay $900k for a $1 million bond from party B and profits $100k, if the company paid its debt. With CDS, party B profits: "Alternatively, one could enter into a credit default swap with the Party B, by selling credit protection and receiving a premium of $100,00. If the company does not default, one would make a profit of $100k without investing anything." Speculation profits are on the margin. Swap prices decline as credit quality increases and rise when quality worsens. "Some who believes that a company's credit quality will change could potentially profit more from investing in swaps than in the underlying bonds."
8. Problem: Party A buys the CDS from Party B, Party B can assign the insurance contract to another party; the final party may or may not be in a position to pay the bond's full value in the case of Party A default. If companies default on their obligations, buyers of credit default swaps would lose money, banks would tighten credit, and interest rates would rise.
9. In 2006, at least $200 billion of General Motor's CDS were estimated to exist, covering $30 billion of bonds. There is a risk that major financial operators are in over their heads leading to dangerous systematic pressures. The danger occurred in 2005 when 100,000 CDS had been verbally agreed to but not settled.
10. According to the US comptroller, JPMorgan Chase, Bank of America, Citibank, Wachovia, and HSBC accounted for 96 percent of the $100 trillion of derivatives controls outstanding among the 836 US banks. JPMorgan being the largest derivate player. Fannie Mae and Freddie Mac had $1.5 trillion of derivates to hedge against risk in their portfolios.
11. "Credit derivatives have never been tested in times of acute market stress, such as a collapse of the real estate market, a cratering economy, or a 1987 type stock crash."
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