The World's Best Book Summaries
What is subprime lending? How do subprime loans generate profit? Subprime lending is the practice of lending money to risky borrowers. The people who borrow on subprime rates tend to earn low incomes or have impaired credit history. As such, they are willing to pay higher interest rates on the borrowed money. Keep reading to learn about the rise of subprime lending and how it generates profit.
Who were the founders of Cornwall Capital? How did the company manage to turn $110,000 into millions? Cornwall Capital Management was literally started out of a backyard shed in Berkeley, California. Its founders Charley Ledley and Jamie May started it on just $110,000 in a Schwab account, but they had another advantage up their sleeve. Here goes the story of how Charley Ledley and Jamie May started Cornwall Capital.
Who is Michael Burry? What was his involvement in the housing market crash? Michael Burry is the founder of the hedge fund Scion Capital. In 2007, Burry saw a rare opportunity in the subprime housing bond market. He was skeptical (to say the least) about the confidence with which Wall Street sold mortgage-backed securities. He realized that these securities were extraordinarily overvalued because they were backed by questionable loans to uncreditworthy Americans. So, Burry decided to short the housing market. Here goes the story of Michael Burry’s “Big Short.”
What are William Easterly’s views on modern foreign aid efforts? How is the top-down approach to international aid reminiscent of the civilizing mission? According to the author of The White Man’s Burden, William Easterly, foreign aid is doing more damage than good. He compared the common top-down aid model to the civilizing mission of the 19th century—when Europeans and Americans believed they had to fix countries that they saw as backward. Here’s why the top-down foreign aid model is doing more harm than good, according to Easterly.
What are the major problems with humanitarian aid? How does bureaucracy get in the way of aid efforts? According to economist William Easterly in his book The White Man’s Burden, the bureaucracy surrounding international aid efforts is getting in the way of progress. The bureaucratic system causes a lack of accountability, coordination, and clear goals. Continue below to learn more about Easterly’s problems with humanitarian aid programs.
Why shouldn’t the West try to impose free-market reforms on developing countries? What problems can this inflict upon the locals? Free-market capitalism can lead to economic growth, but that doesn’t mean that it should be forced upon developing nations that aren’t ready for such reform. When more developed countries try to impose their will upon other nations, it usually does more harm than good. Keep reading to learn what economist William Easterly has to say about this topic of controversy.
What is information asymmetry? What are the ethical implications of asymmetries in information? Asymmetry of information is where one party involved in a transaction has more information than the other party. According to Nassim Taleb, the author of Skin in the Game, asymmetry of information is essentially the same as asymmetry of risk. When there is a hidden imbalance of information in a transaction, the party with less knowledge incurs more risk. In this article, we’ll explain how the risk created by information asymmetry contributes to unethical transactions.
Why does inequality exist? Do you think some economic equality is healthy for the world? Economic inequality is a sad reality of life. Interestingly, however, people around the world think that some economic inequality is good—although they want far less than there currently is. In this article, we’ll discuss why most people don’t want total equality. We’ll also discuss some hypothetical opinions as to what level of inequality would be ideal.
Why does mass employment promote inefficiency? Do you think it’s possible to completely eliminate labor market inefficiency? According to Nassim Taleb, inefficiency at work is an unavoidable weakness of mass employment. Employees limit their freedom in order to maintain productive organizations for their employers, and what they get in return—the paycheck. However, it’s impossible to get employees totally invested in the company’s game. In this article, we’ll discuss why inefficiency is an inherent by-product of mass employment.
What is social class mobility? How does social class mobility contribute to economic equality? Social class mobility refers to the degree to which people are able to move between classes within the economic stratification system. According to Nassim Taleb, the author of Skin in the Game, social class mobility is a more telling representation of a nation’s economic inequality than static inequality (the inequality of a population at a point in time). In this article, we’ll explore why social class mobility is a better metric to track when measuring economic inequality.