Posts filed under “Bailout Nation”

Bookonomics (or, why writers barely make min. wage)

One of the questions I get all the time is about the economics of the book: How much did it sell, what was your advance, what did it cost to produce. I was thinking about this as I prepare for April 15th, so I did a quick run down of costs.

Here is the skinny: The initial advance for Bailout Nation from McGraw Hill was $50k. You get half upon signing, and the other half when there is an “accepted manuscript” by the publisher.

Recall that there was a small problem with McGraw Hill over my treatment of their S&P division and the rest of the criminally corrupt rating agencies (gee, why did they object to that?). My publishing contract with them gave me final edit, so when they balked at what I had written, I exercised my right to buy the back my manuscript. Once I signed with another publisher (Wiley), I was obligated to return the $25k (which I of course did).

The Wiley contract was a $100k advance, plus back end royalties. The old joke is your agent should insure you never see royalties (i.e., get it all up front). I think I need to sell another 40 -50,000 copies before any royalties come in.

Now, $100k sounds like a lot of money, but in Bookanomics terms, its not much at all. There are all sorts of costs, and they come right off of the top. I ended up with about a fifth of that.

20%? How does THAT happen? Well, right off the bat the agent takes 15%. (That’s gross; my next book deal will be net). That takes us down to $85k. I had to return $25k to McGraw Hill, bringing the net to $60k.

Aaron, who was much more of a collaborator than an editor, was paid $15k. I paid my team of researchers over $10k for their work. (That brings us down to $35k).

I paid for all the cartoons in the book ($3,000) The artwork for the cover (under $1,000), and a few other small incidentals (also ~$1,000).  That doesn’t include all of the blog readers who contributed research, artwork, ideas, notes, editing, reading drafts — all for free.

The final tally:

Advance $100,000

Return prior advance $25,000
Agent $15,000
Editor $15,000
Research $10,000
Artwork $4,000
Other $1,000
Pretax net: $30k
After tax: ~$20k

Pretty astonishing when you see it in black and white.

Now consider this: Over the course of the year, I spent nights, weekends, vacations, and towards the final deadlines, days in the office working on this. My best estimate is I put in about 20-30 hours a week for 15 months (not counting promotional tour, which adds another few 100 hours). Let’s ballpark it and say ~2,000 hours.

So, my pay scale for writing what has been called the best reviewed book on the bailouts is a little better than the current minimum wage.

And a few other writers tell me how lucky I am, that very often, its a break even proposition or worse.

Of course, there are other benefits — People who otherwise wouldn’t have thought twice about you (Him? He’s an idiot!) suddenly start to take you seriously. You become “the guy who wrote the book.” Your speaking fees double, your regular business benefits. Other publishers start pitching you book ideas. In general, your personal brand becomes more valuable. My friend (and book agent) Lloyd Jassin says you write a book to “Build your Brand.”  And their is much truth to that.

There are many intangible benefits as well (book groupies!). In my case, it was cathartic, as it was a productive outlet for all the righteous fury that had built up watching the whole disaster unfold in slow-motion. It helped to “quiet down the voices in my heads.”

But Bookonomics means that making a living writing books is something very few people seem to be able to do . . .


UPDATE: February 6, 2010, 2:37 pm

As several readers observed, the 1st advance/return was a wash (+$25k -$25k = 0). They are correct.

But as noted above, I am thinking in terms of this years taxes — since I already paid tax on the $25k in 2008, the $25k that went back in 2009 comes off the top of the income statement for this April 15th for 2009.

Ignoring the different years tax consequences for a moment, the total income for the book increases if you offset the $25. That makes the gross $125k, leaving me $55k after costs, with a net after NYS and federal taxes a gain of about ~$33k, which is better than a sharp stick in the eye.

This raises my pay scale from under $10 to to $16 per hour.

Category: Bailout Nation, Bailouts, Financial Press, Media

Markets! Finance! Scandal!

I did an interview with Max Keiser out of Germany last week — they only had to bleep me twice.

Category: Bailout Nation, Bailouts, Video

Wages of Failure: Exec Comp at Bear, Lehman 2000-08

I stumbled across a fascinating pierce of research (via a reader) regarding misaligned pay incentives Bear Stearns and Lehman Brothers: “The standard narrative of the meltdown of Bear Stearns and Lehman Brothers assumes that the wealth of the top executives of these firms was largely wiped out along with their firms. In the ongoing debate…Read More

Category: Bailout Nation, Bailouts, Corporate Management, Wages & Income

Stopping Counter-Productive Mortgage Mods and Foreclosure Abatements

“The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis. We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway.” -Kevin Katari, managing member of Watershed Asset Management,…Read More

Category: Bailout Nation, Bailouts, Credit, Real Estate

Miami Herald: A look back at the best business books of 2009

Bailout Nation made another “Best of” year end list: A look back at the best business books of 2009 I didn’t — couldn’t — read every business book published during the past year, but I was still gob-smacked by the number of books that I did read in 2009, including a few just for fun….Read More

Category: Bailout Nation, Books

USA Today: Best Business Books

USA Today is out with its list of best business books for 2009 — Too Big Too Fail and Bailout Nation top the list. “After the collapse of Lehman Bros. in September 2008, Federal Reserve Chairman Ben Bernanke, then-Treasury secretary Henry Paulson and then-New York Fed president Timothy Geithner stood on the brink of catastrophe….Read More

Category: Bailout Nation, Books

Cash for Clunkers Visualization

Cash for Clunkers – Visualization and Analysis December 9th, 2009 Cash for Clunkers: A Dynamic Map of the Car Allowance Rebate Systems (CARS) from Michael J Bommarito II on Vimeo. Hat tip Paul!

Category: Bailout Nation

Books in My Queue

I have a long list of books waiting to be read — these half dozen, however, are at the top of my list — sitting on a shelf, patiently waiting to be read — or for my next flight: • Carmen M. Reinhart and Kenneth Rogoff, This Time is Different: Eight Centuries of Financial Folly…Read More

Category: Bailout Nation, Books, Markets

Bailout Nation Reviews (So Far)

Here are the full run of reviews of the book:

Mainstream Media Reviews

New York Times:
Rescues Unlimited: Government as Wall Street’s Enabler
NYT, August 2, 2009

Wall Street Journal:
… And Dave Has His Book List
WSJ, July 26, 2009

Greenspan Flunks Test, Bush Falls Into $15 Trillion Pit: Books
Review by James Pressley
Bloomberg, May 27 2009

Book Review: Rescue Fatigue
Michael Maiello, 07.16.09, 12:01 AM EDT
Barry Ritholtz’s ”Bailout Nation.”

Asia Times
Named and shamed
Reviewed by Muhammad Cohen

The roots of ‘Bailout Nation’
Commentary: Ritholtz book dissects crisis and Greenspan
By Howard Gold

Bailout study widens the “Big Picture”
Thu Jun 11, 2009 3:47pm EDT
By Pedro Nicolaci da Costa

Miami Herald
Economics stories can be unexciting, but recent books try to keep their readers awake.
Miami Herald, Monday, 06.01.09


Las Vegas Business Press
Big bailouts a perversion of capitalism, author argues
October 05, 2009

The Hindu
Faux capitalists look for the free lunch
D. Murali
September 19, 2009

ABC News
‘Self-Inflicted Damage’: Highlights From ‘Bailout Nation’
New Book From Bailout Critic Barry Ritholtz Takes on Citigroup, Chrysler and More
ABC NEWS Business Unit, May 27, 2009

See also First Amendment Award for Outstanding Journalism: Best Book Bailout Nation

Blog Reviews:
Read More

Category: Apprenticed Investor, Bailout Nation, Books

$15,000 Home Buyers Credit Costs $292,000/home

I have long argued that home prices are elevated, and until they normalize, the economy will be stuck in the doldrums. I even wrote a chapter of Bailout Nation, titled “The Virtue of Foreclosure.” I make a basic economic argument that the excess credit of the 2001-07 era is unwinding, and foreclosures are part of…Read More

Category: Bailout Nation, Bailouts, Credit, Real Estate