Learn more Shop now Learn more Shop now Shop now Shop now Shop now Shop now Shop now Shop now Shop now Shop now Learn More Shop now Learn more Click Here Shop Kindle Learn More Shop now Shop Women's Shop Men's

on 5 October 2008
This book asserts that whilst efficient market theory does fit trade in goods and services generally, the evidence does not support its fitting assets such as land, and shares. It argues that as a result of what the author sees as a state of denial by most economists, economic policy targets inflation or aims to maintain continuous economic growth. The author suggests, with arguments that are said to be based on the thoughts of Keynes and Minsky and seem compelling to a non-economist, that central banks should rather target asset/land price inflation.

The author is a control engineer and a financial analyst, and his arguments resonate with this reviewer who is also an engineer by origin. What would be interesting is to have reasoned comments from an open minded professonal economist.

That said the book is a good read and for the curious a very different analysis of the financial turmoil of 2008.
11 Comment| 25 people found this helpful. Was this review helpful to you?YesNoReport abuse
on 21 November 2008
This book is one of the better things I have read about the financial crisis. It's a nicely-written and clearly argued case against the efficent markets hypothesis (EMH) and the argument that left to their own financial markets will tend towards equilibrium. In fact a large part of the author's motivation for writing the book seems to be to drive a stake through the heart of the efficent markets hypothesis, which he sees as fundamentally wrong (no argument here!).

As such the book is broadly pro-Keynes, and very pro-Minsky. It takes as a given Minsky's view that markets are inherently unstable and will inevitably swing between boom and bust, and that the busts can be very bad indeed if no action is taken. The suggestion is that Minksy's financial instability hypothesis should replace the EMH as our bedrock understanding of how financial markets work.

Notably this leads him query what central banks are trying to do. He is particularly scathing of Fed, which he suggests tries to combine a belief in the EMH with intervention, when logically they should preclude each other. He argues central banks should refocus their attention on credit expansion and asset price bubbles, rather than consumer price inflation. Notably he therefore believes that bubbles both exist (this might seem obvious, but it's actually an important point) and that central banks can do something about them, though in practice it's credit creation that he thinks should be monitored.

That's the headline argument, but there are lots of nicely structured points building up to it along the way. There's a great section on why even 'fundamental' company analysis on its own can fail to spot the distorting effects of bubbles.

Anyway, definely worth a read, and given that it's both very clearly-written and one of these double-spaced books you can get through it in no time.
0Comment| 20 people found this helpful. Was this review helpful to you?YesNoReport abuse
on 6 March 2017
Clear, well written and surprisingly amusing
0Comment|Was this review helpful to you?YesNoReport abuse
on 27 December 2008
What a pleasure to read this small book that combines clarity, wit and depth in explainig the roots of financial crises like the one we have been experiencing since the summer of 2007. Reading it one cannot but think about the tremendous power that mainstream theories have in keeping the interest of academics and professionals focused on a set of dogmas and predetermined approaches, while ignoring any dissonant voice. Decades of macroeconomics texts have all but ignored the destabilising role of debt financed asset markets, implicitly assuming its behaviour as similar to that of markets for goods and services. This mindset was in accordance with the partylike mood of most politicians and investment bankers during the long boom years up to 2006. As the CEO of one of the failed major banks famously put it, the idea was to go on dancing while there was music playing. George Cooper elegantly shows how governments and central bankers alike, relying on mainstream macroeconomic concepts and statistics, happily ignored the signs of the huge credit/asset price bubble whose burst finally brought down the confidence in our financial institutions.
I really enjoyed reading this book, that hinges on the best tradition of free thinking in economics, and has the clarity and humour that is all so often absent in the literature of the "dismal science".
0Comment| 11 people found this helpful. Was this review helpful to you?YesNoReport abuse
on 30 September 2008
172 page analysis of the origin of the current financial crisis. Author argues that the widely accepted Efficient Markets theory has dominated economic thinking of the management of the economy/financial markets. Alas, the facts do not support this theory. Crisis appear far more frequently that theory suggests. In fact, he argues that financial systems are prone to the formation of boom-bust cycles. As an example, rising property prices give lenders a false sense of security in increasing lending money, which in turn increases property prices, which in turn "justifies" lending the money and so on. He discusses the role of central banks and their failure to address the problems of excessive credit creation. Current solutions to the crisis include allowing markets to sort out the problem themselves (the Great Depression route);encourage yet another huge debt-fuelled spending spree; or let inflation rip thereby debasing the outstanding stock of debt. The author argues for a more regular "hand on the tiller" approach, preventing excesses from appearing in the economy. Highly recommended.
0Comment| 22 people found this helpful. Was this review helpful to you?YesNoReport abuse
on 7 October 2008
I completely agree with the positive recommendations of The Economist Magazine and the reviewer. George Cooper combines a strong technical and practical investment background to produce a modern study of the best management of our complex economy. I feel Cooper opens this subject up to every thoughtful investor {regardless their background) by writing in down-to-earth English. He uses everyday examples, like a baker making and selling bread. His clear understandings of the material and deep sympathy for the reader motivate his use of these everyday examples to eliminate the need for mathematical equations. He still maintains the needed precision.
I was persuaded that economic crises are inevitable, and enjoyed his ideas on how we might deal with them. I would like to recommend Cooper's clear, cogent presentation to every investor and student who is curious about how to improve our economy.
0Comment| 37 people found this helpful. Was this review helpful to you?YesNoReport abuse
on 22 March 2009
George Cooper book "The Origin of Financial Crises" will become a classic reference to be read by present and future generations. Without taboos and/or politics, George Cooper has brought forward the combined insight of the M3 - Minsky, Maxwell and Mandelbrot. The Efficient Market Hypothesis is once again exposed to its reality, it is a useless approach to manage our economy and financial markets. What applies to the goods and service market can not be applied to the financial assets world. I hope to see this book part of the academic curriculum of Economics and Business School. The book is full of straightforward example, rich in information with plenty of reference to outstanding economists Keynes and Minsky.
A must read.
0Comment| 5 people found this helpful. Was this review helpful to you?YesNoReport abuse
on 9 June 2009
I have always believed that to teach a technical subject to a non-technical audience; requires a teacher with an extremely good grasp of the subject. The author has pitched the content of this book at the complete layman; I think you could almost give this book to schoolchildren. The explanations are extremely simplistic ; but even if you fail to grasp any of the technical content, you will still get the general message of the book. The author believes that the people in charge of the US and UK banking system are incapable of controlling the frequent credit crunches because they are using the wrong statistical prediction systems. The author claims that the current control techniques are proven to `not work' but the `bright sparks in pin stripe suits' refuse to acknowledge they have a problem. For those who would like to understand the subject to a greater depth; there is a lot of references to books and articles. The main area which is missing from the book , is the political interference; politics gets little more than a few glancing blows. I have learned a considerable amount from this book, both at the political and the economic theory and would thoroughly recommend this book to anyone of any ability.
Having read the book and understood some of it, I am left with the problem of whether the author's opinions are correct. Reading the Amazon reviews gives the opinions of several readers who understand the technical aspects of the subject; unfortunately , they don't agree with the author opinions. This give me a message that if the existing approach is proven `not to work' and the proposed changes are unlikely to work; we are in more trouble than the book implies.
11 Comment| 3 people found this helpful. Was this review helpful to you?YesNoReport abuse
TOP 500 REVIEWERon 8 June 2009
Analyst George Cooper's book seems to prioritize passionate (although informed and understandable) advocacy over a strictly reportorial explanation of economic ideas. He clarifies his belief that much of the present fiscal misery flows from decades of unwarranted confidence in the "Efficient Market Hypothesis." He offers the work of 1970s American economist Hyman Minsky, 19th century physicist James Clerk Maxwell and the inventor of fractal geometry Benoit Mandelbrot, to support his claim that experts could detect, govern and manage economic bubbles before they pop. He also recommends a dose of inflation plus governmental controls on credit creation to fix the economic system. He summarizes Minsky, uses Maxwell's work on steam engine governors as a metaphor for managing credit creation and applies Mandelbrot's observation of a memory effect to the economy. Even though his presentation of the efficient markets fallacy seems oversimplified in parts, his theory is interesting. getAbstract recommends Cooper's background research on fiscal policy ideas, if not on every facet of fiscal events. The more government controls you favor, the more likely you are to be persuaded by his passion.
0Comment| 3 people found this helpful. Was this review helpful to you?YesNoReport abuse
on 4 May 2013
A riveting read and not just for those with a background in finance. George does an amazing job of taking the layman through the reasons behind the current global financial crisis. It reads very much like an evolving story as it meanders through the current problems while drawing on fascinating examples and parallels in the scientific world. Honest, wonderfully critical, and yet optimistic. One of those rare books that actually make you feel smarter having read it. A must read!
0Comment| 3 people found this helpful. Was this review helpful to you?YesNoReport abuse

Need customer service? Click here