Category: Books and Movies about Debt

  • Elliott, Apollo, Caesar’s Palace and a Bunch of Bankruptcy Law Professors

    Posted by

    Mitu Gulati

    One of the most dramatic stories in corporate finance and bankruptcy over the past decade has been the Caesar's Palace battle between a bunch of hard nosed distressed debt hedge funds and big bad private equity shops.  A bunch of masters of the universe types fighting it out to the death. (For my part: I'm interested in this because some of the big players from the Argentine pari passu battle are involved and there was a battle over the aggressive use of Exit Consents).

    Turns out that this Caesar's story is going to be front and center at an upcoming bankruptcy conference that three good friends, Bob Rasmussen, Mike Simkovic and Samir Parikh are running, where one of the authors of "The Caesar's Palace Coup", the FT's Sujeet Indap, is going to be on a panel with the heavy hitters, Ken Liang, Bruce Bennett and Richard Davis. I always find it fascinating to hear how financial journalists and law professors, both of whom have dug deep into a set of events, tell the same story. 

    The formal announcement, courtesy of Samir Parikh, is here:

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  • David Graeber’s Debt, The First 5000 Years

    Posted by

    Alan White

    I’m just getting around to reading a 2014 book some Creditslips readers may be familiar with, Debt: The First 5000 Years. In this utterly fascinating work, Anthropologist David Graeber exhaustively recounts the history of debt and money. He begins by debunking the myth of barter, the story told in introductory economics textbooks that money was spontaneously invented to permit merchants to exchange goods and services in imaginary markets, as an improvement over primitive market economies based on barter. In fact, early human societies all relied on central planning (by kings and high priests), communism, gift-giving, redistribution, and various forms of debt, notably in Mesopotamia, Egypt and Greece, the earliest western civilizations, and probably in India and China as well. Debts and their units of account (i.e. money) arose to compensate for injuries, to seal marriages and other relationships, and to tabulate taxes paid and owed to sovereigns. Kings invented coinage both to relieve the poverty of their subjects and to provision their armies by spending coins, and as a convenient means to collect taxes. Modern monetary theorists like to cite this research to make the essential point that money and markets are created by sovereigns and states, and rarely if ever arose spontaneously. The idealized construct of a free market based solely on exchange first arose much later in economic history, in mercantilist societies and then with the liberal philosophers (Bentham, Owen, Smith, Ricardo) of the Industrial Revolution. 

    Bankruptcy has always been with us. From the earliest times debt-based money led to  Screen Shot 2020-06-18 at 5.11.12 PMperiodic crises and debtor revolts, and wise rulers from the dawn of written history periodically decreed the cancellation of all debts, sometimes memorialized by the physical destruction of debt tokens. The biblical inscription on the Liberty Bell from Leviticus, “proclaim liberty throughout the land”, was the announcement of a debt jubilee including the liberation of debt slaves. The Rosetta Stone was a similar Ptolemaic royal decree announcing a tax and debt jubilee.

    Capitalism had its origins not in the exchange of goods and services between free traders and workers but in slavery and debt peonage, not only in the United States but in every colonial empire.  After reminding us of Martin Luther King’s description of the founding documents as an unpaid debt to Black Americans, Graeber concludes by reminding us that the validity and morality of various debts can and should be determined democratically. Thought provoking in a moment when we hear calls for both payment of reparations and cancellation of student loan and housing debts.  

  • Liked Evicted? — Read Maid

    Posted by

    Pamela Foohey

    MaidStephanie Land recently tweeted this depressing statistic: "a single parent would have to work 140 hours a week at minimum wage to pay for basic necessities." And Land would know. Her new memoir — Maid: Hard Work, Low Pay, and a Mother's Will to Survive — chronicles her time as a single mother working as a house cleaner and just scraping by on the combination of her paycheck and various forms of government assistance. In telling her story of ending up a single mother living in a homeless shelter with effectively no family or friends to turn to for help, of figuring out how to make a little money working insanely hard, and of dealing with the stigma of asking for government "handouts," Land weaves a narrative about life on the financial precipice that sticks with you. And embedded in her story are glimpses into the lives of her clients, through which Land creates portraits of the trials of (usually) better off families who nonetheless struggle in different ways.

    In short, read her memoir. It's fantastic. And if you're not totally convinced that you must read it right now, there's more after the jump.

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  • Holiday Reading Recommendation and a Research Question on the 1MDB Case

    Posted by

    Mitu Gulati

    The 1MDB case has been on the front pages of the financial papers on a number of occasions recently. The reason: The US justice system is investigating the scam and senior executives from everyone’s favorite ethical investment back, Goldman Sachs, including Lloyd Blankfein, have been caught up in it. And this leads me to my recommendation for holiday reading, if you like reading financial fraud books. The book is The Billion Dollar Whale, by Bradley Hope and Tom Wright of the WSJ. At first, I thought that the book was about the London Whale, but it turns out to be about the rise and fall of a Wharton educated Malaysian named Jho Low – a fascinating character who appears to have engineered one of the biggest financial frauds of the century, while also throwing the most ostentatious parties ever. If you want more background, there is a fun discussion of the book on my favorite financial podcast, Slate Money (Emily Peck, Anna Szymanski and Felix Salmon are a brilliant, and often hilarious, combination). Indeed, I picked up the book after listening to their podcast on it.  There is also a short, but on the money, review in the New Yorker by Sheelah Kolhatkar. Among the many colorful characters involved in the version of the story told in The Billion Dollar Whale are Gary Cohn (of Goldman and the Trump’s economic advisory team), Leo DiCaprio, and the Wolf of Wall Street (both the movie and the main character, Jordan Belfort).

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  • Swindlers and Crooks Doing Backflips: New Balleisen Book on Fraud

    Posted by

    Melissa Jacoby

    BalleisenBookNot a moment too soon, Princeton University Press has just released Fraud: An American History from Barnum to Madoff by historian & Duke University Vice Provost Ed Balleisen. (Some readers might be familiar with his earlier book on bankruptcy in Antibellum America).

    As I learned when reviewing an earlier draft, Fraud is meticulously researched and completely fascinating, with plenty of careful attention to law and regulatory structures. The book's other virtues are well encapsulated by Kirkus:

    "Balleisen casts a gimlet eye on the passing parade of hucksters and charlatans, peppering a narrative long on theory with juicy asides that build toward a comprehensive catalog of ‘Old Swindles in New Jargon’. . . . Ranging among the disciplines of history, economics, and psychology, Balleisen constructs a sturdy narrative of the many ways in which we have fallen prey to the swindler, and continue to do so, as well as of how American society and its institutions have tried to build protections against the con. But these protections eventually run up against accusations of violating ‘longstanding principles of due process,’ since the bigger the con, the more lawyers arrayed behind it."—Kirkus

    Although it starts in the 19th Century, the book's breadth includes our recent "deregulatory" decades and the impact of that approach on fraud containment.  A book for our life and times for sure.

     

  • Recommended Reading: Empire of the Fund

    Posted by

    Jason Kilborn

    EmpireofthefundimageIt's that time of year again! Time to revisit and perhaps rebalance the investments in your retirement portfolio. While it is a sad fact that many people lack significant retirement savings, it is nonetheless useful for those interested in consumer finance (and investment companies, pensions, etc.) to think about how retirement savings plans work and to be able to offer some advice, for example, to debtors emerging from bankruptcy with their clean slate. William Birdthistle, of Chicago-Kent law school, has recently released Empire of the Fund, a magnificent new work on the most common vehicle that carries individuals' retirement savings in the US: mutual funds.

    I have heard that Birdthistle, who teaches across town from me, is legendary in the classroom. Having read his new book, I'm not at all surprised. While his fairly esoteric subject matter made me hesitate to nominate his book in response to Katie's post, Birdthistle has really pulled one off here by managing to make a book about the structure and pitfalls of mutual funds and retirement savings … extremely entertaining! It is masterfully written, with both erudite references to relevant comments by literary and historical figures, along with laugh-out-loud allusions to modern culture ("OMG! Friends, right! Mutual funds are lame!"). This book is an absolutely brilliant example of how to make a work on an otherwise dry financial subject not only accessible to the general public, but a real pleasure to read. It is no wonder the New York Times calls this "a lively new book."

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  • Book of the Year

    Posted by

    Katie Porter

    EvicitedCoverCredit Slips readers are invited to share the best credit/finance book of this year. The book can be a monograph, fiction, textbook, anything. It doesn't have to be published this year; just that you found it this year.

    My nomination is Evicted by Matthew Desmond. It's an ethnography of evictions in Milwaukee and compellingly describes the problems of financial distress. The book describes how tenants struggle to make rent, and the strategies used by landlords, with the help of the courts and sheriff's department, to collect if they cannot. The site for the book contains amazing photographs– check it out.

    While the book focuses on evictions for nonpayment of rent, the foreclosure crisis also wreaked havoc on millions of lower-income Americans who may never own a home. When the property owner was foreclosed upon, the tenants found themselves on the street. The scarce and uneven protections available led to the enactment of the Protecting Tenant at Foreclosure Act. That law expired two years ago, leaving at-will tenants in about half of states vulnerable to eviction immediately after foreclosure.

    Evicted describes the heartache that comes with home loss: the strain on family relationships, the mental anguish, the physical illness, and other harms. These problems are all too familiar to those who study consumer bankruptcy, but Desmond's work is a powerful story of financial distress that ensnares families who cannot make ends meet.

  • John Oliver and Consumer Law YouTube Videos

    Posted by

    Dalie Jimenez

    I’m trying something new this year. My consumer bankruptcy policy seminar students will read many great articles by many wonderful academics on this blog, as well as others, but this year, their “reading” will also include a great deal of YouTube.

    90% of the videos are John Oliver segments from his excellent show on HBO, Last Week Tonight. They cover particular “products” (student loans, credit reports, debt buying, payday loans, auto loans, retirement plans and financial advisors) and middle class issues (minimum wage, wage gap, wealth gap, paid family leave).

    I thought Credit Slips readers might enjoy seeing them all in one place. Here they are in no particular order. Let me know if I’ve missed any!

  • Are we poor?

    Posted by

    Katie Porter

    If you have kids who talk as much as mine (gee, wonder where they picked up loquacity as a trait), conversations can go nearly anywhere. My boys, ages 9 and 6, are quite interested in money lately, a phenomenon driven in part by the tooth fairy and their discovery of gift cards at a recent birthday party. Here is a recent excerpt:

    "Mom, is the reason that I can't have the Lego Batman DC set because we are poor? Jpeg-194x300

    "We are not poor."

    "Well, if are rich, then why can't I have it?"

    "I didn't say we were rich. We aren't rich."

    "Mom . . . . [big sigh of frustration] . . . Are we rich or are we poor?"

    I recently read the Opposite of Spoiled by Ron Leiber, a NY Times money reporter. He provides straightforward advice on how to handle these questions and more. Even if one takes a slightly different tact with their kids, I completely agree with his main point:  parents should not avoid these conversations because they are uncomfortable or inconvenient or difficult. Kids talk about this stuff and draw conclusions. Creating a conversation is a way to share your values and learn about your children.

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  • Scarcity of Money? Or Time?

    Posted by

    Katie Porter

    How is it that I never find the time to blog? My answer would be that I simply do not have the time. But of course I have the same hours in a day as my co-bloggers. I could argue that I have more demands on my time, but I know very well that we are all busy. Scarcity, a book by Sendhil Mullainathan and Eldar Shafir, has many lessons for busy people, including those of us who are busy thinking about the difficulties faced by people who have a scarcity of income or disposable income after debt. 

    The book looks at scarcity in varied contexts such as time, money, food, friendship. It argues that there is a common logic to situations of scarcity: a mindset that captures our attention and changes how we think. At an optimal level, scarcity can create positive focus. But the same capture of the mind can preoccupy us and make us vulnerable to poor thinking and impulse control. ScarcityThe authors find, for example, that being poor reduces a person's cognitive capacity more than going one full night without sleep.

    The implications for those in financial scarcity are powerful, particularly in terms of policy intervention. The authors focus on the need for "slack" in program design; for example, job training programs with modular classes that can be taken out of order so if a person misses a class, they can more easily make up the class rather than falling behind on linear content and having to drop out.

    My thinking went to chapter 13 and the debate about a "cushion" in chapter 13 plans. While some judges and trustees permit this (or even insist on it), others see it as an indication of weakness. If you deserve a discharge, you need to learn within limits. The scarcity of a confirmed chapter 13 plan, with its 100% draw on all disposable income, creates a mindset that can itself be harmful. People with some financial slack may, in fact, be better able to build the financial habits and position themselves for the rehabilitation that is bankruptcy's goal. Building financial savings into chapter 13 as a necessary expense would reduce the cognitive burden of bankruptcy and insulate people from the harms of financial scarcity after bankruptcy. The result, according to the research of Mullainathan and Shafir, would be debtors emerging from bankruptcy with better self-control, more focus, and stronger decisionmaking.