The Spider Network

The Spider Network

The Wild Story of A Math Genius, A Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History

Book - 2017
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"The Wall Street Journal's award-winning business reporter unveils the bizarre and sinister story of how a math genius named Tom Hayes, a handful of outrageous confederates, and a deeply corrupt banking system ignited one of the greatest financial scandals in history. In 2006, an oddball group of bankers, traders and brokers from some of the world's largest financial institutions made a startling realization: Libor-- the London interbank offered rate, which determines the interest rates on trillions in loans worldwide-- was set daily by a small group of easily manipulated functionaries, and that they could reap huge profits by nudging it to suit their trading portfolios. Tom Hayes, a brilliant but troubled mathematician, became the linchpin of a wild alliance that among others included a French trader nicknamed 'Gollum'; the broker 'Abbo,' who liked to publicly strip naked when drinking; a Kazakh chicken farmer turned something short of financial whiz kid; a broker known as 'Village' (short for 'Village Idiot') and fascinated with human-animal sex; an executive called "Clumpy" because of his patchwork hair loss; and a broker uncreatively nicknamed 'Big Nose.' Eventually known as the 'Spider Network,' Hayes's circle generated untold riches -- until it all unraveled in spectacularly vicious, backstabbing fashion. The Spider Network is not only a rollicking account of the scam, but a provocative examination of a financial system that was crooked throughout, designed to promote envelope-pushing behavior while shielding higher-ups from the consequences of their subordinates' rapacious actions"-- Provided by publisher.
Publisher: New York, NY : Custom House, an imprint of William Morrow/HarperCollins Publishers, [2017]
Edition: First edition
ISBN: 9780062452986
0062452983
Branch Call Number: 364.168 ENRICH
Characteristics: xiii, 509 pages ; 24 cm

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StarGladiator
Jun 07, 2019

"Paranoid populists who say global corporations and international capitalists are conspiring against us are deluded, possibly hallucinating." - Robert Reich (The Future of Success, 2003) - - academic, Wall Street minion, poseur who claims to be a progressive
_________________________________________________________________________________________
I am very uncomfortable with this book as the author personalizes so much - - I much prefer Erin Arvedlund's book on this subject [the rigging of LIBOR], Open Secret, written quite awhile back and in a far more neutral, journalistic manner - - perhaps not as interesting, but far more reliable.
This author, David Enrich, gives the standard, and highly incorrect, definition for credit default swaps [CDSes], which should freak out any discerning reader. By comparison, should one read the paper, Criminal Capital by Stephen Platt, he gives the proper definition of the CDS, stating that some banks " . . . structured and sold CDOs for the express purpose of buying CDSs to bet against them . . " - - fully cognizant that the CDOs would fail and they'd reap a fortune. Furthermore, Mr. Platt elaborates, "Banks were actually creating and selling securities so that they could profit by betting that they were worthless." Mr. Platt fully explains that " . . . speculators (including banks) with no interest in the underlying loans began to buy CDSs as a means of betting on whether those loans would be repaid."
[In other words, a sure thing global betting pool of guaranteed payouts - - a swindle of epic proportion!]
To explain the LIBOR rigging: Limited financial types with the King County gov't [Washington state, USA] were sold an interest-rate swap while the investment firm utilized the rigged LIBOR rates to hornswoggle those King County employees and large sums were lost by them - - which they made up for by jacking up bus fares on their Metro system - - which, of course, they never explained to the public! Had the King County guys been more astute they would have purchased a second, counter-balancing interest-rate swap from a different investment firm or bank - - but they were lacking and the bus-riding citizenry paid the price! By contrast, the high-end auto company, Porsche, made more money during at least one year on interest-rate swaps than they did selling Porches!
Where the author shines is towards the end of the book when he explains that LIBOR rigging was the work of an international cartel of banks, with UBS and through their law firm, Gibson Dunn, essentially running the investigation for the CFTC and DoJ!
O . . . . . M . . . . . G!
In other words, the crooks were in charge of the prosecution! [Thanks to Gibson Dunn the vast amount of important evidence was excluded! ! !]
LIBOR rigging occurred because it was not regulated in the U.K., just as those CDS swindles occurred because they were not regulated in the USA. You understand this from reading Mr. Platt's paper [Criminal Capital]; I'm not sure you'll understand this from reading Enrich's book, which is why I recommend Open Secret by Erin Arvedlund and Platt's paper - - although do read this if you can, just be sure to include supplemental reading.
_________________________________________________________________________________
Criminal Capital paper:
http://kadamaee.ir/payesh/books-tank/24/Platt%20-%20Criminal%20Capital;%20How%20the%20Finance%20Industry%20Facilitate%20Crime%20(2015).pdf

s
StarGladiator
Jun 07, 2019

"Paranoid populists who say global corporations and international capitalists are conspiring against us are deluded, possibly hallucinating." - Robert Reich (The Future of Success, 2003) - - academic, Wall Street minion, poseur who claims to be a progressive
_________________________________________________________________________________________
I am very uncomfortable with this book as the author personalizes so much - - I much prefer Erin Arvedlund's book on this subject [the rigging of LIBOR], Open Secret, written quite awhile back and in a far more neutral, journalistic manner - - perhaps not as interesting, but far more reliable.
This author, David Enrich, gives the standard, and highly incorrect, definition for credit default swaps [CDSes], which should freak out any discerning reader. By comparison, should one read the paper, Criminal Capital by Stephen Platt, he gives the proper definition of the CDS, stating that some banks " . . . structured and sold CDOs for the express purpose of buying CDSs to bet against them . . " - - fully cognizant that the CDOs would fail and they'd reap a fortune. Furthermore, Mr. Platt elaborates, "Banks were actually creating and selling securities so that they could profit by betting that they were worthless." Mr. Platt fully explains that " . . . speculators (including banks) with no interest in the underlying loans began to buy CDSs as a means of betting on whether those loans would be repaid."
[In other words, a sure thing global betting pool of guaranteed payouts - - a swindle of epic proportion!]
To explain the LIBOR rigging: Limited financial types with the King County gov't [Washington state, USA] were sold an interest-rate swap while the investment firm utilized the rigged LIBOR rates to hornswoggle those King County employees and large sums were lost by them - - which they made up for by jacking up bus fares on their Metro system - - which, of course, they never explained to the public! Had the King County guys been more astute they would have purchased a second, counter-balancing interest-rate swap from a different investment firm or bank - - but they were lacking and the bus-riding citizenry paid the price! By contrast, the high-end auto company, Porsche, made more money during at least one year on interest-rate swaps than they did selling Porches!
Where the author shines is towards the end of the book when he explains that LIBOR rigging was the work of an international cartel of banks, with UBS and through their law firm, Gibson Dunn, essentially running the investigation for the CFTC and DoJ!
O . . . . . M . . . . . G!
In other words, the crooks were in charge of the prosecution! [Thanks to Gibson Dunn the vast amount of important evidence was excluded! ! !]
LIBOR rigging occurred because it was not regulated in the U.K., just as those CDS swindles occurred because they were not regulated in the USA. You understand this from reading Mr. Platt's paper [Criminal Capital]; I'm not sure you'll understand this from reading Enrich's book, which is why I recommend Open Secret by Erin Arvedlund and Platt's paper - - although do read this if you can, just be sure to include supplemental reading.
_________________________________________________________________________________
Criminal Capital paper:
http://kadamaee.ir/payesh/books-tank/24/Platt%20-%20Criminal%20Capital;%20How%20the%20Finance%20Industry%20Facilitate%20Crime%20(2015).pdf

ArapahoeStaff15 Oct 25, 2017

A fast-paced, highly entertaining account of one of the greatest financial scandals in history. A masterful feat of research and investigative reporting written like a suspenseful thriller.

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