The Book of Lists

First published in 1977, The Book of Lists, compiled by David Wallechinsky, (his father) Irving Wallace and (his sister) Amy Wallace, contained hundreds of lists including: famous people who died during sex, people suspected of being the real Jack the Ripper and people misquoted by Ronald Reagan. It was wonderful idea and a delightful occasional diversion.

In 86 Biggest Lies Mr. Talbott, a former investment banker, borrows the basic idea though the list is less unusual, less salacious and less esoteric than its eclectic antecedent. Mr. Talbott focuses on the problems of the global financial crisis and reduces it to a list focused on causes, faux solutions, investment ‘truths’, economics, finance, derivatives, hedge funds, government and regulation. The author’s track record in warning of the current crisis and banking crisis in 2003 and 2006 provides credibility.

The format is simple - Lie #, a typical formulation held as self evident truth followed by Mr. Talbott’s critique. The central thesis is that if you know the lies then you are better placed to understand and solve the problems that exist.

Mr. Talbott, who is nothing if not prolific (he has turned out almost a book a year since 2003), is probably correct in many of his targets. Attacks on everything and everybody leaves little standing and grate after a while. Pronouncements like the “entire global banking system is insolvent” without any facts or analysis do not forward the argument. The banking system does have problems but not every bank in the world in bankrupt, I think!

As required by publishing convention, Mr. Talbott offers answers, though unpopular ones – lower growth, shrinking size of the economy, inflating away the debt etc. The suggestions are genuine, honest and not without merit but they are neither startling nor new.

86 Biggest Lies comes over as a little simplistic. Finance and financiers have a lot to answer for but they are not the sole problem at the heart of the financial crisis. It comes over as a rant delivered with considerable bravado but little detailed support to some of his assertions. Perhaps that is the nature of lists, light on detail with a lot of things ‘to do’.

There is subtle danger in this populist approach. Thomas Pynchon observed: “If they can get you to ask the wrong questions then the answers don’t matter.” Simplistic causes and solutions may prevent real issues from being debated and dealt with.

© 2009 Satyajit Das All Rights reserved.

Satyajit Das is a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives (2006, FT-Prentice Hall).