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TOP 1000 REVIEWERon 28 December 2008
Niall Ferguson again here brings us a history that is informative, entertaining and sobering. Being published in the midst of a global economic meltdown, for a book such as this, is a mixed blessing, as a step too far on the bearish side may make the author look like a doommonger, whilst being even slightly bullish might look blinkered. Ferguson, though, seems to manage to pull it off, though that equally is a spot evaluation. However, though it's clear where his loyalties lie in the pro/anti capitalism debate, the balance of the narrative tends nevertheless towards the various shocks delivered to the system rather than towards the prosperity delivered, albeit still strictly speaking to a relative minority of humanity, by markets and their lubricant, money.

As it turned out, some of the ground covered was familiar territory to me, bringing together strands of other books I've read recently, including Findlay and O'Rourke's Power And Plenty, Bentley's A Book Of Numbers, Schama's The American Future and even Lonely Planet Andalucia.

But some of it was new. He gives the origins of ghetto (a geto was a casting, and the original ghetto was in Venice's foundry district); explains that a consol gets its name from "consolidated fund"; and confirms that "dollar" comes from the German "thaler", on which the Spanish based the piece of eight, the world's first truly global currency.

Ferguson is also adept at telling stories: his account of the First Opium War, for example, is probably the clearest I've come across, and in the chapter on housing there is an excellent explanation of how the development of securitisation by Salomons ultimately led to the sub-prime meltdown.

He's not always right. In a description of segregation in Detroit and the 1967 riots he describes Aretha Franklin as a Motown star, which she almost, but never quite, was. And the final chapter begins with speculation that the rest of the world has decoupled from the United States economically. Unfortunately time has not been kind to this notion, with only Brazil, it appears, unaffected so far (December 2008), oil down by over $100 a barrel from its mid-08 peak, and even China's growth looking very shaky. But if there are any signs that "His pages are hot with proof-stage tyremarks", as one newspaper review alleged, then Ferguson is not alone in his revisionism: after all, even the German finance minister got it wrong. And in mitigation, this is the man who ended a previous television series (Colossus) warning that the United States was "heading for a credit crunch".

This is not, to be sure, a technical book. Readers seeking more detail of some of the principles described should go to the likes of Brealey and Myers's Principles of Corporate Finance. However, Ferguson more than succeeds in achieving his objective of providing a foundation of financial awareness for the general reader, providing plenty of food for thought. Amongst the morsels on offer: in better days for Argentina, the other Harrods was in Buenos Aires; the birth of stock markets was in 17th Century Netherlands, a country now often reduced to two letters in "Benelux"; and he ultimately really hits the button marked Panic by reminding us of the consequences of al-Qaeda's effecting a nuclear strike, of a further Katrina-like event, or of inundation courtesy of global warming.

So, great book, and so much for the past, but what of the future? Ferguson describes himself as a "liberal fundamentalist", and certainly descriptions of him as "rightwing" look overdone. Nevertheless, there seems to be a faith implicit that capitalism can cure itself, counter to the standard Marxist analysis of a bankrupt and inevitably doomed system. So where, as Larry Elliott has asked, is the intellectually endorsed social democratic alternative? It is implicit, ironically, in the response of the US government, but the measures being taken by that and several other governments has the appearance of a huge geoeconomic experiment unsupported by any clear theory other than it is the opposite of what was done in the 1930s. What is needed is a Keynes for the noughties. I'm looking forward to reading Krugman's new work to see if that is where the gap is filled.
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on 30 January 2009
This is an excellent broad history of our financial system - covering the development of bond & stock markets, our obsession with property as an investment and more. What makes this a 5 star read is linking historical events to our current predicament - both as examples of how things how gone wrong before and as direct causes of the latest credit crunch. Of course given it's breadth it can only touch on many topics, but for those areas where I have read more fulsome accounts (such as Enron, LTCM) I found his summaries to be very pertinent.

The accounts of various bubbles and crashes are interesting and somewhat comforting - the finance world seems to be phoenix-like in its ability to collapse and re-generate so maybe we are not without hope, however in his description of 'Chimerica' you do wonder if we are at the beginning of a new age, the transfer of power to a new owner...too early to say perhaps?

What is less comforting are the parallels he draws with pre-WW1 complacency that there could never be a global war because countries were too interdependent financially for this to be in anyone's interests, it's a chilling thought as he describes how future historians could look back and see the root causes today, just as current historians do today for WW1.

Overall I'd say this is a great introduction to some complex topics, and even where the explanations were a bit mind-boggling (still don't get interest rate swaps!) this doesn't detract from the flow of the story. Two things would be a great addition to this book - a glossary of some of the financial terms and a selected bibliography for further reading.
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Controversial counterfactual historian Niall Fergusson here turns his considerable talent for lucid explanation of complex historical developments to the evolution of credit and debt and the growth of what we call `money' in all its forms. In six clear chapters, he does a mainly excellent job of laying out the evolution of ever more complex economic systems through the three thousand years since the ancient Mesopotamians used clay tablets to record debt and credit over decades of commodity transactions, to the hedge funds and derivatives which have featured so prominently in the recent global financial crisis.

On the way he explains the origin of the modern banking system in the `ghettos' of Venice in the 1300s, the adoption and later the abandonment of silver and gold to underpin national currencies, the first truly global currency (the Spanish `piece of eight'), the origin of the first stock exchange (in Amsterdam) in the 1600s, the innovation of scientifically calculated actuarial insurance tables by the Scottish Widows insurance company in the 1700s and the modern obsession with property as a store of wealth and as collateral for credit loans. He discusses the concept of the welfare state, the government bond market and the reasons for occasional total financial collapses, as in Germany in the 1920s and Argentina several times in the past 150 years most recently in 1989.

The causes of booms and busts, bubbles and crashes are analysed with knowledge and insight. The author demonstrates in his best-seller `Empire' and more thoroughly here his thesis that poverty in the `developing world' is caused by the absence of stable financial institutions because such jurisdictions are outside the global economic system rather than the more naïve and simplistic narrative of `exploitation' by international institutions (business, the world bank etc.). At a more local level the same principles operate with the same results: loan sharking grows where there is lack of access to normal credit and this is the main cause for the perpetuation of the poverty trap.

A final chapter deals with the rise of `the wonderful dual country of Chimerica' the interdependent symbiotic relationship between the USA and China which accounts for one tenth of the world's land surface, a quarter of its population, one third of all global economic output and half of all economic growth over the past ten years. He explores how this important relationship is coming to dominate the global economy.

Ferguson is a champion of the globalization of capital markets and makes a strong case for the liberal economics of Milton Friedman. He has a habit of distilling down complex and bewildering subjects to their basic elements and explaining the underlying processes clearly and with great insight. Recommended reading for anyone who wants a more than basic introduction to the history of the global economy and how it works but does not have the time nor inclination to do all the reading necessary for a degree in economics and finance. He knows his stuff, and is a lively and interesting writer.
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on 27 February 2010
This is a very enjoyable, intelligent book; excellent value for its insight. It is a popular history, covering a great deal and as such, a very fine one.

Sometimes I wonder whether we really need shares and credit (and all the futures, options and so on.) That we do is shown with the history of the Dutch East India Company - a fascinating account of the first joint stock company that shows just how useful shares and credit (and their tradability) are in a joint human enterprise; leading into the next step, wherein investors get carried away, all described in the history of John Law and the Mississippi Bubble.

When reading about the current crisis and possible regulatory and policy changes, there is often talk about "counter-cyclical" regulation and banks accruing capital during good times. How does one know "good times", when a boom is only recognised afterwards? The bubbles chapter of Money introduces Displacement/Euphoria/Mania/Distress/Revulsion and neatly compares stock market bubbles through history, showing how they are forgetten by the time of the next one.

This is a popular history traversing the major developments in money and finance. It would be wrong to criticise it for lack of detail. In fact some of its short explanations are better than whole books. In particular the few pages on the early Hedge Fund LTCM's collapse are a much better and clearer explanation than in the tedious "When Genius Failed". The warning for this part - powerful mathematics is invalid with over-simple assumptions - is open-ended. Lots of Hedge Funds are doing more and quicker electronic trading (let them do so, as long as they can't crash the banks that fund them.)

As other reviewers point out, you can see the author's political position. It is a well-reasoned one - don't fly off the handle at the Chilean economic history; read it carefully: it is substantially about about an economic policy and its successes, detail given. If you think Ferguson is too straightforwardly monetarist there, then the Argentinian history contradicts that: inflation as a political phenomenon, not monetary.

The final chapter discusses competition and innovation in finance. Stating Schumpeter's original description of Creative Destruction, the pace of bankruptcy and renewal is made clear. Although expressed in the attractive language of natural selection, the book concludes with Schumpeter's warning not to over-regulate and save the infirm company. I felt the author was too optimistic in his implication that this process will keep working well - think of the big banks held up by the British and US taxpayer; what will become of them? They seem to me to be almost like the British lame duck state enterprises of the 70s, but where those industries representatives (Trades Unionists) were almost like pantomime villains, our new vested interests seem less recognisable. J K Galbraith (History of Economics) has more to say about the sly, monopolistic enterprise, masquerading as free enterprise.
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This book accompanied the Channel Four television series of the same name, and apart from a few areas where more detail is given, sticks very closely to the series. Ferguson covers very early days of using money and then gets going on money lending (it was against the principles of the Catholic Church) and hence carried out by Jews in the first ghetto (or foundry) in Venice. He progresses to bonds and the fortunes generated by Nathan Rothschild betting against government bonds after the defeat of Napoleon. Then stocks or shares are considered and the early problems with schemes that resulted in investment 'bubbles', the leading role of the Netherlands and the Dutch East India Company, the colossal swindles of John Law running a pyramid scheme in France with the Mississippi Company and the foundation of New Orleans. The failure of insurance companies in really big disasters and the growth of national insurance schemes. It is here that the role of Milton Friedman and the Chicago Boys and the very successful Chilean system of private managed state pension and insurance schemes are described, all under the rule of President Pinochet. This is a system of save-as-you-go rather than pay-as-you-go used in Western European democracies. The risk of investing in property is discussed, generally with a view to showing that there is more risk than supposed, an argument that I think is rather overdone especially for a country like Britain that has a net immigration surplus and, therefore, a built in pressure on housing. Finally the present inter-relationship between American borrowing and Chinese lending is reviewed and their apparent interdependence suggested. On the whole the book is entertaining and has something of a 'Gee Whiz' feel about it. It is not a financial textbook and is not the place to find convincing explanations for some of his assertions, indeed a few explanations are somewhat muddled.
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VINE VOICEon 28 September 2010
As I work in a bank for my day job, I was dreading listening to this in the journey to & from work as I thought it would feel like an extension of my job, or like extra curricular revision of a dry, boring subject.

Fortunately it turned out to be a fascinatingly insightful tale of all things financial, with a compelling (if slightly posh narrator) & a rich collection of stories & anecdotes to illustrate each of its chapters.

Covering all aspects of finance, from notes & coin through to bonds & insurance, I found it captivating & educational in equal measure. Of the stories, the most interesting ones were about the founding of the bond market in the ever-feuding principalities of Renaissance Italy and also the ones concerning the foundation of companies (including an explanation of how they began in 17th 18th Century Holland, through to the collapse of Enron).

Although it may seem subjects such as coinage & insurance would be dreadfully dull, somehow they made exciting by stories from history & modern times.

And, as someone who works in the finance industry, I would thoroughly recommend this to expert & financial illiterate alike, as it covers the topic of money in a thorough, but simple way.

If the evidence of our burgeoning budget deficit is anything to go by, then people in the country could do with listening to this on the way to work...
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on 23 December 2010
Popular history must inform and entertain, and this volume does both. The pace is brisk and the demarcation of the subject matter, for example into sovereign debt, equities, home ownership, welfare states etc. provides momentum and facilitates better recall. In other words, it prevents boredom setting in and you remember what you've read more than is often the case with history books (speaking for myself of course!).

I think this works well as a very broad-brush history of money and finance.

S Gleadall - author of The Metaphysics of Markets

The Metaphysics of Markets
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on 13 April 2009
This is one of the best books I have read so far this year. It is well-written and interesting and I felt no need to have seen the TV series (I didn't). The only reason for giving it four stars rather than five is that his criticism of those responsible for what has happened recently was somewhat veiled and a bit politically correct. That said, I suppose a lot of it was written before the full picture of the calamity currently afflicting us had emerged. Nevertheless, I learnt a few things and enjoyed it at the same time.
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on 21 November 2008
The title of this book makes quite a claim. Niall Ferguson is a Harvard University professor from the UK, who produced a volume on the story of the Rothschild financial dynasty in the late 1990s, The book certainly has a number of interesting features e.g. its summary of recent events both precipitating and within the housing market 'crisis' and international commercial relationships between superpowers. Nevertheless, the impression is that the work - fascinating though it is in parts - may just have been a little bit 'scraped together', somewhat hurried.

Given the lightning blitz which has rocked all corners, streets and avenues of the globe's financial institutions, this is perhaps understandable and even forgivable, almost. Recent news bulletins have featured housing crises, bank runs and a possible recession looming forbiddingly. Given that he presumably had only human resources at his disposal, the author may well have reached for a crystal ball as a source of greater predictability than the global market indicators have been able to offer any of us, himself included, of late.

Returning to our initial point, viz. the sheer scope this work claims to encompass, this reviewer particularly appreciated Ferguson's sweep through the civilisations of the past in this Financial History of the World; thus the Inca's spurning of gold and silver as money, the pre-Christian Mesopotamian/Babylonian credit notes in the form of clay tablets and many more indicators of the development of, and various civilisations' attitudes towards, money and finance in general. Yet Ferguson omits to make, as far as this reviewer can see, any reference to the light which spectral analysis technology (through its illumination of discarded domestic papyri texts) has thrown on the surprising wealth of certain women within the ancient world.

Ferguson's philosophy, which he keeps hidden up his sleeve for most of the book, proposes that finance evolves through natural selection. He uses this hypothesis to account for the appearance and denigration of new financial models which respond to new demands made by various societies. That analysis may risk a degree of oversimplification, but that will be variously assessed by the background, training, and disposition of the reader. All that being said, this is a challenging and a stimulating read.

Michael Calum Jacques
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on 23 September 2010
When I was reading this book I couldn't help wishing that he would have gone deeper into the system of the ancient worlds, which only got scratched on the surface. He had some interresting cases in the book, but often they were coloured by the author's own attitude towards the subject which I find rather unfortunate. Therefore I would only recommend this book, if your looking for a basic introduction on the subject, which doesn't offer much in the way of in debt analysis. Often the author also ignores what historians have written on the subject, which also gives a very single sided analysis.
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