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Cowardly Capitalism: The Myth of the Global Financial Casino [Hardcover]

Daniel Ben-Ami
5.0 out of 5 stars  See all reviews (2 customer reviews)

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Book Description

9 Mar 2001
A bold challenge to accepted ideas about the need for regulation of world financial markets
In a controversial new book sure to spark debate throughout the world financial community, British financial journalist and investment expert Daniel Ben–Ami makes a strong case against the current trend toward increased government regulation of the international money markets. In stark contrast to the accepted wisdom, promulgated by the likes of Soros and Krugman, Ben–Ami avers that the real problem currently threatening global finance is not wanton risk–taking, but excessive risk aversion. Rather than reduce the likelihood of financial crises, he believes that greater intervention will bring greater problems including panic waves that could crush the economies of entire regions in a matter of hours. Writing in a lively style, devoid of mathematics, and using many allusions to current affairs, pop culture, and business publishing to illustrate his arguments, Ben–Ami makes this book an enjoyable, highly accessible read.
Daniel Ben–Ami (London, UK) is a professional investment adviser and editor in chief of a well–respected journal for investment advisers.

Product details

  • Hardcover: 206 pages
  • Publisher: John Wiley & Sons (9 Mar 2001)
  • Language: English
  • ISBN-10: 0471899631
  • ISBN-13: 978-0471899631
  • Product Dimensions: 23.7 x 15.9 x 2.2 cm
  • Average Customer Review: 5.0 out of 5 stars  See all reviews (2 customer reviews)
  • Amazon Bestsellers Rank: 1,091,784 in Books (See Top 100 in Books)
  • See Complete Table of Contents

More About the Author

Daniel has worked as a journalist for over 20 years, during which he has contributed to numerous general and specialist publications. Ferraris For All, his book defending economic progress, will be published in July. His book on global finance, Cowardly Capitalism (Wiley, 2001), was recommended by the Baker Library of Harvard Business School. Daniel's website can be found at: http://www.danielbenami.com/

Product Description

Amazon Review

Cowardly Capitalism is nothing if not a provocative title for a book that invites the reader to indulge in some vigorous mental gymnastics. Given the usual depiction of capitalism as an all-devouring monster, it comes as something of a shock that it might be thought of more as the lily-livered lion in The Wizard of Oz. Fear of risk rather than a willingness to risk is the prevailing mood, according to Cowardly Capitalism. The financial markets are not, after all, the casinos of popular metaphor.

The pinkishness of many Financial Times journalists is legendary, so it's hardly a surprise to learn that former FT man Daniel Ben-Ami is now a senior editor with Morningstar. What is more of a surprise is that anyone connected with a traditional anti-capitalist name should be berating that same economic system for, in effect, not being ruthless and buccaneering enough; for preferring to save and preserve rather than invest and exploit. These are, indeed, interesting times. An intrinsic system of risk management can hinder economic activity, says Ben-Ami in the chapter entitled "Killing The Patient: Why the quest for safety can be dangerous"--a chapter that addresses the problems of sustainable rates of growth and financial instability. Readers would expect certain standards from an author with such a pedigree (FT, Economist Intelligence Unit, The Guardian) and they will not be disappointed. Ben-Ami writes clearly and lucidly, as, for example, in a brief passage on Gordon Brown, Chancellor of the Exchequer in the UK since New Labour came to power in 1997. Ben-Ami highlights the "Iron Chancellor" as an arch-exponent of an approach that refuses to consider the possibility that a degree of instability may often be a price worth paying for faster growth. "In his emphasis on prudence and in his other rhetoric he often sounds more like the manager of a small bank branch than the finance minister of a large economy," says the author. --Brian Bollen

Review

"Ben–Ami′s well–written and thought–provoking book, is bound to attract considerable comment. This book will not be one of your riskier investments."
(Lloyd′s List, 3rd March 2001)

" This is a thoughtful, easy–to–read book which nevertheless tackles big issues from a fresh perspective."
(Portfolio International, May 2001)

"thought–provoking book."
(MoneyWise, June 2001)

"fascinating analysis"
(Financial News,13 August 2001)
"His is a brilliant introduction to the impenetrable world of high finance and an uncompromising analysis of its function in the contemporary economy."
(The Independent, 23rd June 2001)

"well–documented short book...a book to make you think"
(IFS News, June 2001)
"excellent book"
(www.zdnet.co.uk 23 October 2001)

Inside This Book (Learn More)
First Sentence
The global financial markets are often seen as a giant casino. Read the first page
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Front Cover | Copyright | Table of Contents | Excerpt | Index | Back Cover
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Most Helpful Customer Reviews
8 of 8 people found the following review helpful
By A Customer
Format:Hardcover
The financial system continues to be one of the most baffling and misunderstood areas of society. This book examines the perceptions and the reality of the financial markets. The tendency is to see these markets as out of control and often in need of greater regulation. However, according to this book, this viewpoint has more to do with today's exaggerated sense of crisis and uncertainty, rather than the realities of the financial system. Through a discussion of the key markets and institutions, the author argues that the financial system is actually characterised by risk aversion - i.e the stock market, investors who diversify risk, derivatives which are a form of risk management, new types of insurance, and so on.
Insofar as there is volatility in the financial markets, (recent examples being the Asian crisis and the recent ups and downs of technology stocks), it is not just down to the frantic activities of traders. Ben Ami's argument is that it has to be seen in relation to the real economy. Here the author suggests that high levels of liquidity and volatility in the financial system is actually a product of slow growth in the real economy, as companies engage in financial engineering and pour money back into the financial markets, rather than invest elsewhere.
The main point is well worth thinking about. We tend to concentrate on financial volatility but miss the problem of risk aversion and a lack of dynamism. The result is slower growth in the economy and relatively dynamic areas such as technology.
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3 of 4 people found the following review helpful
5.0 out of 5 stars Fascinating, Contrarian and Long Overdue 19 Sep 2001
Format:Hardcover
The author performs a complete and delicate post-mortem of modern capitalist beliefs and misconceptions. I read Ayn Rand's "Capitalism: The Unknown Ideal" some time ago. Daniel Ben-Ami constructs a compelling argument in favour of unregulated markets, healthy competition and good old fashoined risk taking. Unlike Raynd he steers away from abstruse philosophical theories and sticks with what really matters to the reader: Real life examples, cataloging the myriad failiures of faux-capitalism. If like me you whince every time you hear about another ill-thought but well intended goverment safeguard, you'll enjoy this book for the intellectual ammunition it delivers.
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Amazon.com: 4.7 out of 5 stars  3 reviews
5 of 9 people found the following review helpful
5.0 out of 5 stars Extraordinarily clear analysis of global finance 21 Oct 2001
By Jose Guilherme - Published on Amazon.com
Format:Hardcover
Usually, books on the dry subject of modern finance are a difficult read but this one is a welcome and worthy exception. The text is so fascinating that I managed to "make it" in three rather short sessions - and without the slightest trace of boredom in the process. I found no superfluous or pseudo-profound sentences and even the footnotes of this carefully researched study fully deserve the reader's attention.
Ben-Ami manages to explain in a few dozen pages the basics of apparently difficult concepts (as he rightly tells us, "even the most complex strategies tend to be built from simple components") such as derivatives, mutual funds, pension funds, hedging, etc. In the process, he shatters a lot of mistaken myths and conventional wisdom.
It is simply not true, he explains, that the instruments of modern finance are essentially speculative; on the contrary, they are usually a means for corporations and investors in general to better manage risk. Modern capitalists, unlike their predecessors of a more dynamic era, have an exaggerated aversion to risk and they try to build their portfolio in a way that minimises it. Thus a corporation dedicated to making cars, for instance, might prefer to invest part of its earnings in derivatives or hedge funds instead of innovating its production processes. The result would of course be a less dynamic form of capitalism, where more resources are spent on the financial markets - as opposed to the real, productive side of the economy. This, insists Ben-Ami, is in short what has been happening since the end of the post-war (1945-73) economic boom.
He offers powerful examples to illustrate his thesis. Yes, he says, it's true that George Soros made a billion dollars out of speculating against the British Pound in the early nineties - but that was only because the fundamentals of the British economy were really incompatible with the high value of its currency. A few years later Soros was betting on a fall of the Rouble and eventually lost two billion dollars. This time he had made a wrong analysis of the fundamentals of the Russian economy and got his fingers burned. The conclusion? Well, speculators really don't have the power to dominate events. So much for the idea that modern economies are but passive instruments at the hands of unscrupulous capitalistic sharks!
Ben-Ami regrets the general climate of fear for the future and horror of risk-taking that he thinks has taken hold of Western Europe and even more the USA in the last few decades - and has been, BTW, amply demonstrated in the recent near-hysteria caused by the appearance of a few cases of Anthrax in the US. He sees in this tendency a sign that the "animal spirits" that Keynes considered essential for the proper working of a dynamic capitalist economy are faltering.
The author doesn't present us a "solution" for this problem, probably because he's well aware of the fact that cultural attitudes are very hard to change. But he does warn that the climate of fear that currently permeates western society constitutes a clear impediment to stronger economic growth, both in the First and Third worlds. And he writes in such a clear, unpretentious style that one might just hope his analysis will eventually find a sympathetic hearing in the decision-making centers of Europe and the United States.
3 of 7 people found the following review helpful
4.0 out of 5 stars Insightful! 7 Nov 2001
By Rolf Dobelli - Published on Amazon.com
Format:Hardcover
Let�s start out this review by stating up front that we disagree with Daniel Ben-Ami�s assertion that a preoccupation with risk measurement and management is a detriment to the global economy. With that out of the way, we can say that Ben-Ami presents a unique analysis of the modern global economy that is not at all without merit. His contention that lagging growth is a greater peril to the world�s economy than financial instability is reasonable and backed up by ample evidence and illustration. And his position that increased regulation could be doing more harm than good will be embraced by all free traders. On the basis of these discussions alone, we [...] recommend this book to anyone thinking seriously about international financial systems. But this book is perhaps most useful as a starting point for debate, which it will certainly generate in the mind of any informed reader. While you might quibble with Ben-Ami�s conclusions � as we do with his assertion that the threat of the 1990s financial crises was overblown � you will not be bored.
1 of 6 people found the following review helpful
5.0 out of 5 stars Fascinating, Contrarian and Long Overdue 19 Sep 2001
By A Customer - Published on Amazon.com
Format:Hardcover
The author performs a complete and delicate post-mortem of modern capitalist beliefs and misconceptions. I read Ayn Rand's "Capitalism: The Unknown Ideal" some time ago. Daniel Ben-Ami constructs a compelling argument in favour of unregulated markets, healthy competition and good old fashioned risk taking. Unlike Raynd he steers away from abstruse philosophical theories and sticks with what really matters to the reader: Real life examples, cataloging the myriad failiures of faux-capitalism. If like me you whince every time you hear about another ill-thought out but well intended goverment safeguard, you'll enjoy this book for the intellectual ammunition it delivers.
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