Top positive review
Wide Ranging and Philosophical
on 8 August 2012
This book is a wide ranging and at times a very philosophical survey of the financial industry, dealing with a wide selection of moral and psychological questions relating to finance.
The first half of the book is a list of job titles within the financial industry and provides a perhaps sympathetic interpretation of what they do and how they do it. This part would be useful to someone thinking of entering the industry.
The second half draws from the authors wide ranging knowledge in this and other areas, to approach a number of issues relating to finance and the way it interacts with wider social objectives.
On the whole I found the book to be informative and a pleasant eclectic read, with a few nuggets of interest, but lacking clear strong focus on memorable big ideas which I could get excited about.
A few ideas ideas which did stick out: Firstly the idea that pension entitlements or debt (Greek debt?) should be promised in a metric which reflects GDP change over time, and other ideas like this for new metrics. I liked the idea of "odious debt" which could be ascribed to some forms of lending, making future collection less enforceable and therefore warning off unscrupulous lenders. E.g. this label of odious debt could be ascribed to home buyers who clearly should not be buying or dictators in Third World countries, which would make new lenders think twice. He interestingly mentions concerns about the shift away from the partnership form of businesses in the financial services industry which may induce more risk taking. Also some good criticism of the efficient market theory and how it was at the root of many recent mistakes. But I found the author to be a little too forgiving of recent mistakes, and a bit too enamoured of financial complexity like mortgage securitisation which I think has been tarnished?
"The convenient opportunity the bubble gave to politicians to make use of the 'let them eat credit' strategy (to use a term coined by Raghuram Rajan after the collapse of the economy) to deal with worldwide rumblings of discontent resulting from increasing social inequality." p114
(Citation from Walter Bagehot 1896, then the editor The Economist ) "Credit-the disposition of one man to trust another-is singularly varying. In England after a great calamity, everybody is suspicious of everybody; as soon as that calamity is forgotten, everybody again confides in everybody." p112.