The lesson of these two books, from a small investor’s perspective, is that the market is rigged in favor of people with inside info. Always assume analysts have conflicts of interest. (Click on the book images to see more details or to purchase.)

Blood on the Street: The Sensational Inside Story of How Wall Street Analysts Duped a Generation of Investors
By Charles Gasparino
Free Press 2005, 368 pages
$17.95 hardcover, $14.30 Kindle

In the booming 1990s, stock analysts Jack Grubman, Henry Blodget, and Mary Meeker issued buy recommendations for the stocks of certain corporations. Those stock values soared, and kept soaring. So did the prestige, celebrity, and salaries of Grubman (at Salomon Smith Barney and later Citigroup), Blodget (Merrill Lynch), and Meeker (Morgan Stanley). Then the tech bubble started to burst, and they saw it coming, but they continued to give high ratings to, let’s see, the tech companies that brought their investment banking business to Salomon, Merrill, and Morgan. When those stocks tanked, the deceptive practices of the analysts were laid bare. SEC chairman Arthur Levitt looked the other way while investors lost billions in stock value.

A little-known attorney general from New York named Elliott Spitzer stepped in to hold Wall Street accountable—for a while. Charles Gasparino, who broke this story in the Wall Street Journal, tells it here in fascinating detail, in an understated style that nevertheless evokes outrage.

Confessions of a Wall Street Analyst: A True Story of Inside Information and Corruption in the Stock Market
By Daniel Reingold, Jennifer Reingold
Harper 2007, 384 pages
$11.16 paperback, $9.56 Kindle

“Confessions” does not accurately describe the substance of this book. The author (a Wall Street analyst from 1989 to 2003) did nothing wrong, so he had nothing to confess. What he does is gripe about the analysts (mainly his competitors) who did things wrong, like insider trading and sellout analysis. He hammers home the lesson that “insider influence is so pervasive in the financial markets that investors should avoid individual stocks completely” (Publishers Weekly).

The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us
By Robyn Meredith
W.W. Norton 2007, 256 pages
$17.13 hardcover, $10.85 paperback, $9.56 Kindle, $19.79 audio CD

Since 2000, China has become “factory to the world, the United States became buyer to the world, and India…back office to the world,” says the author, who covers India and China for Forbes. In this thoroughly researched book, Meredith looks critically at each country’s economic development and plans for the future, and observes that China is making better progress than India because, for example, China’s citizens save more, while India’s infrastructure and education system are falling behind. Pro-trade and anti-protectionist, she believes that for the USA to stay competitive, it must “strengthen its education system, promote innovation, forget about protectionism…and focus on creating jobs.” (Booklist) [Click on the book image for more details or to purchase.]

Dancing With Giants: China, India, And the Global Economy
Edited by L. Alan Winters and Yashid Yusuf
World Bank Publications 2007, 288 pages
$24.95 paperback

This book’s seven chapters, each authored by leading researchers in their field, analyze China’s and India’s international trade, industrialization, foreign investment and capital flows, and impact of their broadening environmental footprints. It concludes that progress in alleviating poverty, reducing inequality, and promoting good governance is necessary for continued rapid and stable growth. It offers “deep insight into the prospects for Chinese and Indian growth and its likely impact on the world economy,” said Lawrence H. Summers, former Treasury secretary and professor of government at Harvard. [Click on the book image for more details or to purchase.]

One thing these five bestsellers have in common: They blame that mother of all scapegoats, greed (among other things) for the economic collapse of 2008-09. (Click on the images to see more details or to purchase at Amazon.com.)

And Then the Roof Caved In: How Wall Street’s Greed and
Stupidity Brought Capitalism to Its Knees
By David Faber
Wiley 2009, 208 pages $17.79 hardcover, $9.99 Kindle

In And Then the Roof Caved In, a CNBC reporter traces the roots of the economic collapse of 2008-09 to failures of investment banks, mortgage lenders, ratings agencies, and the U.S. government. It all started when the Federal Reserve pushed interest rates to historic lows after 9/11/01.

The Housing Boom and Bust
By Thomas Sowell
Basic 2009, 192 pages
$16.47 hardcover, $9.99 Kindle

In The Housing Boom and Bust, a prolific political journalist explains the economics and politics of the housing boom and its collapse. He pulls no punches when discussing politicians of either party, the financial dangers they created, or the distractions they created later to escape their own responsibility for what happened.

A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers
By Lawrence G. McDonald and Patrick Robinson
Crown Business 2009, 368 pages
$17.20 hardcover, $9.99 Kindle

The demise of the nation’s oldest investment bank was a devastating blow to the world’s financial system. The authors of A Colossal Failure, one a former Lehman VP, blame the firm’s executives who were arrogant and recklessly addicted to growth.

House of Cards: A Tale of Hubris and Wretched Excess on Wall Street
By William D. Cohan
Doubleday 2009, 480 pages
$18.45 hardcover, $9.99 Kindle

In House of Cards, Cohan, a financial journalist, traces the beginning of Wall Street’s collapse to the fall of Bear Stearns. He “vividly documents the mix of arrogance, greed, recklessness, and pettiness that took down the 86-year-old brokerage house, and then the entire economy.” (BusinessWeek) He “does a brilliant job of sketching in the eccentric, vulgar, greedy, profane and coarse individuals” who ruined Bear Stearns. (Los Angeles Times)

Fool’s Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe
By Gillian Tett
Free Press 2009, 304 pages
$16.56 hardcover, $9.99 Kindle

A Financial Times journalist details how the market in securitized credit derivatives was perverted by greed, arrogance, and delusion, in Fool’s Gold.