Inventing Money, by Nicholas Dunbar

Subject: The failure of Long Term Capital Management. See also gjm's recommendation of Lowenstein, but Dunbar supplies a briefer and more financially sophisticated treatment.

Lessons: The danger of leverage, which is one potentially very expensive form of overconfidence. The world contains more risks than anyone, no matter how clever, can think of to hedge against. LTCM, contrary to popular belief, did in fact hedge against Russia defaulting on its own bonds, through currency forward contracts. What they failed to hedge against was Russia then suspending payment on the forward contracts, and hiding its hard currency.