Big Bets Gone Bad: Derivatives and Bankruptcy in Orange County. The Largest Municipal Failure in U.S. History

Book Description

How can a municipal investment pool, which is supposed to be safe, lose billions of dollars? What are derivatives and how did they contribute to this tragedy?
In December 1994, Orange County became the largest municipality in U.S. history to become bankrupt. By borrowing heavily and placing the wrong bets, Orange County Treasurer Robert Citron lost $1.7 billion of Orange County's $7.4 billion investment portfolio.
Big Bets Gone Bad: Derivatives and Bankruptcy in Orange County is the first detailed description of the Orange County bankruptcy. Author Philippe Jorion, the only professor in Orange County who teaches and researches derivatives, is uniquely placed to understand the technical details of the portfolio and climate in the Orange County municipal government that encouraged the decisions that led to the bankruptcy.
Big Bets Gone Bad provides an introduction to the U.S. bond market and details Federal Reserve Chairman Greenspan's efforts to tighten credit. Its description of the $35 trillion derivatives market makes the losses of Barings Bank, Kashima Oil, West Virginia, and Metallgesellschaft more understandable. Big Bets Gone Bad explains what everyone should know about tax monies and public investments. Because nobody likes to lose $1.7 billion.

Customer Reviews:

Risk Management, emphasis on management.......2004-05-18

Jorion gives a good text book account of the Orange County debacle, concluding that this was a gross but purely human error, and not a failure of the financial system or the derivatives market.

The first part of the book introduces the problem quickly then proceeds to give the reader a crash course in risk management theory, explaining among other things the concept of Value-at-Risk (VaR). Many types of derivatives are described and their proper use explained. We are given a manager's working knowlege of finance.

Jorion then moves to the Orange County debacle proper and his conclusion is frighteningly simple: the financial managers of Orange County, entrusted with billions, did not know what they were doing. They were ignorant of what we learned in the first few chapters. They were amateur money managers playing roulette.

The book is still topical. The Basel II banking agreements mandate strict capital reserve requirements for a variety of risks, such as market and liquidity risk, so that understanding the concept of VaR is more important than ever. Most importantly however, Basel II requires preparation and reserves for operation risk, which most often has to do with the people side of finance rather than the mathematical vality of the models used. Jorion's book is thus also a good introduction to the human side of risk.

Excellent explanation........2002-12-11

This book tells the story of a 1.4 billion$ financial loss by the Orange County municipality.
The author explains very clearly what happened.
The municipality, through its treasurer, speculated that interest rates would stay the same or fall. Into the bargain, he leveraged his position with a factor 3. The means for the speculation were repos on bonds.

When the interest rates went through the roof (from 5,25% to 8% = + 52%), the value of the collateral (the bonds) for his position fell (with a factor 3). He got a margin call, but couldn't pay it. The biggest part of the investment (held by FBCS) was liquidated with a phenomenal loss. Only Merrill Lynch didn't cover their position.

The author gives excellent explanations on some very specialized investments like reverse floaters and other high tech financial operations of which the value can only calculated by partial integrals.

Food for investment bankers.

Interesting and informative read.......2000-07-29

Readable account of the Orange County financial blow-up. Particularly interesting is the description of Robert Citron, the hapless college dropout who controlled billions of dollars of public money. Also fascinating are the prescient comments of the obscure accountant who ran against unbeatable Citron in the election prior to the disaster. Jorion manages to educate the reader, in a very painless way, about the institutions of the bond market (such as repos).

On the minus side, the book is not particularly well documented (in terms of, for example, the graphs and the sources of the data) and some chapters seem suspiciously like lecture notes, hastily adapted to a book format. Still, an enjoyable trip to the dark side of financial market.

Profiteering without Prudence or Oversight.......1999-05-31

Jorion should be commended for his insightful, first-class treatment of this history making event. Big Bets... is a fast, fluid read that is devoid of technical terms and is written in an active, conversational and explanatory voice that the typical layman can readily understand. In this book, which reads more like gripping fiction, we are treated to an excellent character sketch of the key culprit in the Orange county financial fiasco, Robert L. Citron, his rise to power, the environment he worked in, the exotic financial tools he carelessly wielded, an unforgettable cast of financial hucksters and ill-advised power wielding greedy misfits, and the ultimate downfall of the Orange county financial safety net and its after-effects.

From this book, we learn that Robert L. Citron was head of a large portfolio, had no oversight, and an inflated ego. His superiors and fellow investment participants (such as the county school district) knew full well what he was doing, but allowed him to continue unsupervised because of his past stellar performance- much of which was due to pure luck and favorable market conditions. We also learn that Citron, much like Nicholas Leeson, the orchestrator of the fall of Barings, was a financial neophyte. While on the one hand believing that he was fully invested in bonds, Citron had taken a heavily leveraged position in very exotic derivative securities, proving to Jorion's point that he really did not have a clue as to what he was doing.

We also learn that Citron (nor the people above him and his investment participants), who had no real background in finance, did not know the difference between market price and face value, nor did he know the difference between an option on an asset and the outright ownership of an asset. Based on one very bad bet on the movement of interest rates, Citron fully invested Orange County's finances in derivative securities that he did not understand at all, and compounded the problem by leveraging his position (basically using a little money to borrow a lot of money) to the extreme.

After reading this book, those of us who believe that our investments, from the retirement funds managed for us by fund advisors and our places of work to our bank accounts and our kids' education funds, are safe should have our heads examined. People such as Citron were not financial gurus, that is certain, but as the more recent derivative led failures at hedge fund Long Term Capital Management (which included the two Nobel laureates who literally wrote the book on derivative pricing on its stellar team of rocket scientists) and Bank of America demonstrate, no one is truly safe.

Book Description

Organizations in Industry offers an in-depth look at historical organizational reality. Intended as a real world companion to classes that involve the theoretical analysis of formal organizations, this straightforward, accessible text presents an inside look at the actual structure and evolution of numerous different industries. Individual chapters are on specific industries and discuss developments from the origin of the industry to the near present, covering automobile manufacture, biotechnology, financial services, health care, labor organizing, microcomputer manufacture, art museums, newspaper publishing, radio broadcasting, railroad transport, and telephony. Ideal for any course in organizational behavior or theory, the benefits of this approach include practical institutional knowledge about particular industries, valuable insight into organizational society through comparative analysis, a clear understanding of the real-life difficulty associated with organizational change, and an opportunity to study the operation of selection processes among organizations.

Organizations in Industry: Strategy, Structure, and Selection (ISBN:0195083105)

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Organizations in Industry: Strategy, Structure, and Selection (ISBN:0195083105)
Glenn R. Carroll
Manufacturer: Oxford Univ. Press
ProductGroup: Book
Binding: Paperback
ASIN: B000LC34SC

Book Description

Vexing Nature? On the Ethical Case Against Agricultural Biotechnology is a collection of philosophical essays on the ethical dimensions of agricultural biotechnology and genetically modified (GM) crops. Agricultural biotechnology refers to a diverse set of industrial techniques used to produce genetically modified foods. Genetically modified (GM) crops are plants manipulated at the molecular level to enhance their value to farmers and consumers.
The ethical issues discussed in Vexing Nature? On the Ethical Case Against Agricultural Biotechnology are diverse and complex. Comstock addresses such concerns as the possibility of genetic engineering producing unanticipated allergens in previously safe foods, unexpectedly toxic health supplements, novel GM diseases, environmental catastrophe, bizarre new lines of animals possessing genes taken from humans, exceedingly wealthy corporations more powerful than the nations trying to regulate them, bankrupted family farmers in the US and Europe, exploited peasant farmers in developing countries, inhumanely treated animals in our labs and on our farms, and corrupted attitudes to nature among our children.
In a fascinating narrative account of a journey that began in 1988 and ended twelve years later, Comstock tells the story of how he, an early and somewhat vocal critic of agricultural biotechnology, changed his mind about the ethical acceptability of GM organisms (GMO). Once tempted to oppose all uses of genetic engineering in agriculture, Comstock came to believe that many uses are morally justifiable, and even required. Vexing Nature? On the Ethical Case Against Agricultural Biotechnology explains his early, anti-GMO, position; the ethical, environmental, economic, social justice and animal rights arguments that led him to reverse himself; and the implications of his new position for public policy.

Customer Reviews:

Thought out and risky.......2004-11-30

Not often do you find a philosopher in mid-career willing to go out on a limb and share their personal search for truth in such a emotionally charged area of ethics. Must read for anyone who takes Bioethics seriously.

Book Description

Two-time Pulitzer Prize winner Edward O. Wilson is one of the leading biologists and philosophical thinkers of our time. In this compelling collection, Wilson's observations range from the tiny glands of ants to the nature of the living universe. Many of the pieces are considered landmarks in evolutionary biology, ecology, and behavioral biology. Wilson explores topics as diverse as slavery in ants, the genetic basis of societal structure, the discovery of the taxon cycle, the original formulation of the theory of island biogeography, a critique of subspecies as a unit of classification, and the conservation of life's diversity. Each article is presented in its original form, dating from Wilson's first published article in 1949 to his most recent exploration of the natural world. Preceding each piece is a brief essay by Wilson that explains the context in which the article was written and provides insights into the scientist himself and the debates of the time.

This collection enables us to share Wilson's various vantage points and to view the complexities of nature through his eyes. Wilson aficionados, along with readers discovering his work for the first time, will find in this collection a world of beauty, complexity, and challenge.

Customer Reviews:

Going Blind?.......2007-08-04

Wilson is brilliant and this book contains a wonderful variety of his work in their original form. But why is it reproduced in teeny tiny print? Better buy a magnifying glass too if you want to read everything. Also some articles were originally printed in color so maps and graphs with color coding are lost in black white and gray. I only gave this book two stars for the presentation, not the content.

A Superb Collection ..........2006-06-06

This is a superb collection of over sixty original scientific papers, book extracts and other articles by Ed Wilson, one of the all-time great scientists. Each article is placed into historical context with a new introduction by Wilson. Organized by major theme area rather than chronologically, the book illustrates how Wilson's grander biological theories have been underpinned by a deep, relentless inquisitiveness. Wilson's fascination with the diversity of nature in general and ants in particular really shines through. The production quality of the book is excellent. Even at the full retail price the book is a bargain; the currently discounted Amazon price is astounding. This book is well worth buying even if you have most of the original papers.

The Ultimate Naturalist.......2006-05-17

E.O. Wilson is America's foremost writer on biology, biodiversity, and conservation. (He has two Pulitzer Prizes to prove it.)In "Nature Revealed," we get a look at his most significant writings, just as they appeared in the original journals. This selection gives us a look into the mind of one of today's most brilliant and influential scientists, but it also presents a moving clarification of some of the most important conservation issues facing us today. Everyone who cares about the fate of the earth should read this book.

Product Description

Based on the opinions of thousands of avid golfers, America's Top Golf Courses covers over 1,000 of the best public, semi-private and resort courses in 49 states plus Puerto Rico and the U.S. Virgin Islands. Choose from over 30 of the guide's handy indexes to find the right course every time, from toughest to most scenic, fastest pace to player-friendly. Each course is rated on Course, Facilities, Service, Value and Cost.

Motherpeace Round Tarot Deck
Average customer rating:

It Screams!

I love them!

**educational and entertaining**

Feminine; yes, Anti-male; certainly not.

An Excellent Tool for Inner Reflection and Growth

Motherpeace Round Tarot Deck

Manufacturer: U.S. Games Systems
ProductGroup: Book
Binding: Cards

Tarot | Divination | New Age | Religion & Spirituality | Subjects | Books
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ASIN: 0880790636

Book Description

The cards in this extraordinary round tarot deck are gestalt circles of powerful symbols celebrating 30,000 years of women's culture throughout the world. 4 1/2" diameter.

Customer Reviews:

It Screams!.......2007-06-08

This is a wonderful tarot deck and it speaks to me loudly and clearly. Highly recommend ordering the Motherpeace Book to go with it so you can understand the cards fully. It's my favorite deck.

I love them!.......2007-01-20

I love them...that's all I can say. Easy to use and connect with. You should buy the book that goes with it as it has more detailed explanations/interpretations of the cards than the mini book that comes with the cards.

**educational and entertaining**.......2006-07-03

De Grandis is a great author I have several books from her.She has a very blunt writing style, which i have come t enjoy and you will too.:)

Feminine; yes, Anti-male; certainly not........2006-04-07

Let me begin by explaining how I came to posess my Motherpeace deck. Many years ago during an amazing session of intuitive counseling these cards spoke to me in such a way that the woman reading for me gifted them to me. She said that although she used the deck daily, they belonged to me as soon as they were placed; indeed they did. Since using these cards over the years not only to help in my own raising of consciousness, but also in reading for others. These cards have never once failed to speak to me. That brings me to the topic of whether or not these cards are anti-male. No of course not, they are however a feminine deck and ultimately designed, in my opinion, to connect specifically with female energy. I normally use these cards with women but have in certain instances helped men to gain clarity through them. In doing so an honest, sensitive depiction of the situation emerges that may not with a more "masculin" deck. These cards are very different from the classic tarot deck and if a "classic" style experience is what you desire another deck is probably going to be more satisfying for you. I absolutely adore these cards and consider them my first level of guidance among the many decks in my collection. Place these before you and feel them in your own hands before drawing a conclusion. No deck is right for all people and if you find these are not for you there will likely be someone on your journey who would benefit from their guidance.

An Excellent Tool for Inner Reflection and Growth.......2005-01-01

I've been reading tarot for ten years. When I want to read Tarot, I look to the Thoth deck. When I want to meditate and explore, I look to Motherpeace. I don't see this as a Tarot deck as much as I see it as a meditation and guidance tool that resonates more with the issues I experience as a woman. Motherpeace speaks to those issues more deeply and loudly than traditional tarot. Readings that I perform with this deck are markedly different than readings with traditional tarot. I don't recall that the creators ever denied that the deck was focused on the feminine and therefore see no reason to criticize that. The deck is female-focused but I don't perceive it as anti-male. In my experience, the descriptions in Vogel's book that imply that they are referring to a male figure can also be referring to a female in the querent's life. The fact that some males have gotten up in arms about this only seems to confirm that there are aspects of the feminine that they are unable to identify with. While the deck does not give "negative" news, I have found it to be rather blunt in pointing out negative aspects of myself that I either need to accept or change. I own both books published by each of the authors and find the differences in their respective interpretations interesting. I recommend that this deck be approached with an open mind and fresh perception of Tarot.

Perla La Loca: A Love and Rockets Book (Love and Rockets (Graphic Novels))
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Perla La Loca: A Love and Rockets Book (Love and Rockets (Graphic Novels))
Jaime Hernandez
Manufacturer: Fantagraphics
ProductGroup: Book
Binding: Paperback

General | Comics & Graphic Novels | Subjects | Books
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Acme Novelty Library #18

ASIN: 156097883X

Book Description

The third volume of Locas stories from Love and Rockets.

Perla la Locabegins with the graphic novel "Wigwam Bam," arguably Jaime Hernandez's definitive statement on the post-punk culture. As Maggie, Hopey, and the rest of the Locas prowl Los Angeles, the East Coast, and parts in between trying to recapture the carefree spirit of those early days—except for Izzy, who tries to flee and ultimately, ironically, is the one who finds Hopey (and who unlocks the secret of Maggie and Hopey's relationship.) "Wigwam Bam" brings us up to date on all the members of Jaime's extensive cast of characters and then drops a narrative bomb on Hopey (and us) in the very last pages.

Split up from Hopey yet again, Maggie bounces back and forth between a one-laundromat town in Texas (the "Chester Square" that serves as the title of two of the strongest stories in the book), where she has to contend with both her own inner demons and a murderous hooker, and Camp Vicki, where she has to fend off her aunt Vicki's attempts to make her a professional wrestler and the unwanted advances of the amorous wrestling champ-to-be, Gina. As usual, Jaime spotlights a wide range of headstrong female characters, including Maggie's sister Esther and her cousin Xochitl; Penny Century, Hopey, and Danita show up as well, as does Rena Titañon (recently seen in Jaime's New York Times serial "La Maggie la Loca"), who, joined by the wrestler El Diablo, dominates the finale with a rousing free-for-all slugfest against six armed thugs. And what's this about Maggie getting married?

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