Book Review: Mr Market Miscalculates by James Grant

James Grant of Interest Rate Observer

Mr. Market Miscalculates

This is my tenth book review on books related to the financial topic. To see my previous book reviews click on Mr. Market Miscalculates: The Bubble Years and Beyond by James Grant.

James Grant is the editor of several other books on finance. He is also is the editor of a popular newsletter titled The Interest Rate Observer. Mr Market Miscalculates is a series of selected speeches and editorials over the past fifteen years. The Mr. Market term was invented and made famous by the father of value investing, Benjamin Graham. The title describes two eras when Mr Market was irrationally exuberant; during the dot com bubble and the housing bubble.

The book can be broken down into two sections. Essays discussing the absurd valuations at the height of the tech bubble, and the miscalculations of investment banks, the Federal Reserve, mortgage lenders and others during the housing bubble. The book is not organized chronologically; rather it is organized by topics (which really are intertwined). Hence you will have any essay talking about the absurd P/Es in 1999, followed by a chapter detailing the absurdity of the ratings given on “AAA” CDOs.

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James Grant devotes much of his essays to sharp criticism of the policies of Bernanke and Alan Greenspan. He repeatedly criticizes Greenspan for his low interest rate policies in the early 2000s and the money printing policies of the Federal Reserve. He also is a big fan of the gold standard and repeatedly criticizes President Nixon’s decision to take the dollar off the gold standard in 1971.

To read the rest of my review, see my column on by clicking on the following link

To purchase the book on click on the following link Mr. Market Miscalculates: The Bubble Years and Beyond

My next book review will be On the Brink: Inside the Race to Stop the Collapse of the Global Financial System by former Treasury Secretary Henry Paulson I will be posting the review in a few days . The book was just released on February 1, 2009 and is already #10 best seller.

Disclosure: New FTC guidelines require me to disclose I have a material connection because I received a free copy of the book to review.

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