'Volcker' arranges the events of the undeniably historic figure’s life neatly but stops short of probing the depths. The book reads like a chronicle o'Volcker' arranges the events of the undeniably historic figure’s life neatly but stops short of probing the depths. The book reads like a chronicle of his actions without delving sufficiently into the motives and ideologies that shaped or propelled him, portraying him less as a person of conviction and more as a historical bystander. Furthermore, the book's reluctance to explore the counterfactuals or the aftermath of Volcker's decisions leaves a gap in understanding his true impact. Effectively, one gets the timeline of events but without a discourse on the essence of Volcker's legacy.
What Volcker did was unprecedented, and would not be attempted by any of his followers even if they had faced a similar problem. There was something about him that was not just a historic accident. While he benefitted both from Carter’s fading months that allowed him to carry out actions that could have been stifled by a stronger administration or from Reagan’s fiscal policies that helped kill inflation comprehensively for decades cementing Volcker’s reputation, it still required a different level of courage of conviction to do what he did.
The book could have discussed the money supply experiments in so many ways, including where they could have proved disastrous. The author could have explored the pieces of training of the man that led to such unorthodox actions. There is some discussion on all these topics, including the real-time views of others in the heydays of his actions, but little that would stand out as new or insightful.
The same is true about the oft-discussed long-term effects of his policies. They are universally praised, and the author could have easily included them without efforts for completion, but there too the book appears rushed. The only thing the author appears comfortable with is when he is discussing the events as they happened, and that’s what makes the book inadequate.
There have been many books on bubbles and busts and long market histories, but few have managed to capture the essence and evolution of Wall Street asThere have been many books on bubbles and busts and long market histories, but few have managed to capture the essence and evolution of Wall Street as effectively as "More Money than God." The book's intent is different, but what it chronicles is a vibrant narrative that reveals the evolution of intricate financial market mechanics in their defining decades starting from the mid-1960s.
The central theme of the book is clearly around the emergence of absolute return funds and big personalities that built the most successful of them. One can read the book for these stories of enormous wealth, which are more than interesting, but the book is also about the market practices that underwent seismic shifts to emerge what they are today.
As a result, the book is also about the first movers in various financial strategies, from systematic shorting, as exemplified by A.W. Jones (who started in early 1950s), to the trailblazers in block trading, commodities, and risk management. The detailed examination of these pioneers – the benefactors of early entry into emerging market bonds or those who mastered the art of exploiting market anomalies - is also the examination of the opportunities that were present in markets because of the fast-evolving economic, political, and financial systems as well as technological and procedural/regulatory landscapes. These stories are not just historical accounts; they are a guidebook to understand why we have the practices we have today. The book showcases how these early adopters reaped the rewards of their foresight and audacity and how their activities and aftermaths led to processes and rules that define today's world.
The book is not merely a glorification of success. The other side of the coin is all the risks that nobody thought of and the lessons learned. The author skillfully illustrates the perils of illiquidity, the dangers of leverage, the foolhardiness in assuming certain distribution in risk models, and the often-overlooked cross-correlations in investment strategies - things that pioneers paid dearly for and have become the bread-and-butter of risk management of today's participants.
The book's factual tone is another of its strengths. While it leans positively towards the alpha-generating industry, it never loses its objective stance. The author's ability to distill complex financial concepts and market dynamics into accessible prose is commendable.
The focus on the subtler aspects of market dynamics and interactions, trading cultures, organizational behaviors, etc, make it a timeless read despite the book capturing only a specific era in financial history. This is what makes it a must-read for anyone with a keen interest in financial markets. One hopes the author or somebody else to write books on non-US markets on similar personalities and evolution and on global markets for post-2010....more
In the chatty, lively, and engaging book "What I Learned About Investing from Darwin," author Pulak Prasad takes readers on an illuminating journey thIn the chatty, lively, and engaging book "What I Learned About Investing from Darwin," author Pulak Prasad takes readers on an illuminating journey through the world of investing. With wit and charm, Prasad weaves his own experiences and insights with the lessons he has learned following his two gurus, Charles Darwin and Warren Buffett.
Prasad, a relatively unknown for those unfamiliar with the Indian equities industry, is an investment legend with a track record comparable to the best worldwide over the last fifteen years. His audacious investment style is deserving of study. This is not just because of the performance but also because of how logical, almost irrefutable, its tenets sound as he explains them, deploying the similes and examples from evolutionary sciences. While his approach may not be the only path to financial success, it is undoubtedly effective and provides readers with plenty of food for thought.
To this reviewer, investors should first and foremost adopt a disciplined, logically sound style that suits their personality and access. Pulak has done this perfectly with a discipline rarely observed among the best professionals. One may have heard Darwin and Buffett's theories countless times before, but he is able to breathe life into well-trodden concepts in every section through the novel connections he makes between the fields. When dotted with real-life examples of his investments, they do not remain pure theories in the book!
Throughout the book, readers are treated to an array of thought-provoking ideas, such as the importance of avoiding forecasts, the benefits of being an investor who focuses more on rejections, the wisdom of minimum versus optimum debt in corporate books, and summary rejection of things that obsess regular investors like quarterly results, daily stock prices, models like DCF, etc. The book reads like a guide on everything unconventional, and yet the logic is presented with such clarity and conviction that one begins to doubt one's sanity for ever believing in anything different!
Overall, a must-read for anyone interested in the world of investing. Its refreshing take on investment strategies and unparalleled depth of wisdom makes it a far superior choice to many of the more popular books on the subject. ...more
MegaThreats fails on multiple counts. Let's ignore that the count to ten is artificial when the first six risks are so intertwined that they could hav MegaThreats fails on multiple counts. Let's ignore that the count to ten is artificial when the first six risks are so intertwined that they could have been counted as one or two without the fine separation. We will return to these six, the best part of the book, later.
The last four non-economic sections are particularly weak, full of oft-heard remarks, and without anything original. The book fully lives up to its reputation for offering no tangible ways out of its doomsday scenarios, which is fine given its well-publicized intentions. It is still not just hopelessly damaging but also misleading. The low point of the book is when the author tries to translate such dire predictions for humanity into an investment strategy in financial markets; it is almost like he has nothing to suggest on how to avert the worst in real life, but he can help you protect your savings!
The economic sections of the first half are where the author is on the home turf. Financial market participants have long given up discussing the risks posed by excessive fiscal profligacy. These risks are exacerbated by monetary adventures, worsening inequality, demographics, populist pressures, and financial market reflexivities. The author is one of many who have read their economic history well to discuss these risks. He excels in his discussions of debt, while his prose is weakest when he begins discussing almost randomly selected historic episodes to support his fears. Rather than repeating descriptions of specific market or economic collapses of the past, the author could have done so much more to separate distinct types of risks, their potential severities, and what could trigger them.
Excessive debt can lead to cyclical downturns, but these are not dangerous if the leverage allows an economy to be on a much better structural path. No one enjoys market or economic downturns. However, if recessions like 2001-03 or 2008 are the price of leading the world in innovation or market return, most long-term theorists would take them any day over any other form of economic setup. The same argument could be made about China's choices so far. That said, if the arguments are for longer, structural decline like that experienced by Japan since the late 1980s or like the US in the 1930s/70s, the text and the logic should have been different.
Those in the habit of constantly evaluating history comprehensively miss how much the world of policymaking has changed, and hence why some of the past warning signs have not worked for years. Think of it this way: a thousand years ago, a voyager planning a journey seven seas across had to plan theoretically months in advance. With all the real-time information, a modern traveler hardly goes to the proverbial drawing board or prepares by the book, focusing instead on avoiding the nearest hazards and traffic while moving toward the destination.
In the world of scant information, a policymaker had to use the support of theoretical frameworks to manage an economy. The modern world allows current policymakers to abandon the rigid straightjacket of textbook theories and steer practically based on data points they see. Economic critics, almost always belonging to various theoretical schools, find framework-less policymaking abhorrent. Not only would each one find some policies inconsistent with their favorite theoretical formulas, but they also struggle to fathom long-term effects and even consistent near-term rationales. Today's policymakers appear capricious and short-sighted to the devotees of Keynes, Friedman, or any other similar great economic thinkers.
For nearly forty years, and notwithstanding many market and economic cycles, markets and economies have avoided prolonged downturns in most countries with proactive, data-driven monetary policymakers. This is not to say that an insidious downturn is not around the corner, but those predicting it need to make their case differently than merely signaling excessive levels in some economic parameters or drawing historical analogies. Given the author's reputation and past work, he must have a lot on why now and how worse it will be, but he missed them entirely in this work. That's all the worse for the book. ...more
Economic historians talk a lot about bubbles and busts, more so about the greatest of them all, the great depression. As they describe events, they poEconomic historians talk a lot about bubbles and busts, more so about the greatest of them all, the great depression. As they describe events, they ponder the causes and effects using various economic, social, behavioral, political, and other theories with cursory references to the personalities.
This book approaches the historic bust from the opposite angle: despite momentous events that preceded the collapse in the previous decades, the author lays the blame squarely on the misguided actions of four gents heading the central banks of the US, UK, France, and Germany.
The approach provides a unique perspective. The policy missteps were not a result of beliefs in wrong economic theories. The author proves that these gents were wrong because of a combination of instinctive steps without thinking about consequences, too much power that others could not check, stubbornness, inexperience, rudimentary institutional structures of the early days, etc.
The claims are somewhat extreme, as are others that deify Keynes or indirectly glorify the current economic management. A lot of sections are full of irrelevant details. At the same time, the author misses out on discussing whether all other crises before or after were also because of incompetent men (it has been chiefly men so far in economic spheres ahead of significant boom-bust episodes) or if 1929 was unique.
Taking a narrow view to make a broad point, one can always debate whether the crash was more intense because the gold standard framework was a wrong monetary framework or whether it was because of the decision-makers who believed in it for whatever human reasons. It is equivalent to asking whether the collapse of the Soviet Union was because of the leaders who ruined the union in the preceding decades or because of the tenets of communism. It is always a combination of both, of course, but few would lay such little importance on beliefs compared to their personalities. ...more
The book is excellent in its sweep of early history, particularly up to the second World War, and does equally well in criticizing both the extreme leThe book is excellent in its sweep of early history, particularly up to the second World War, and does equally well in criticizing both the extreme left and right economic theories. However, the discussions lose objectivity and relevance as the author turns to the recent decades. They turn blindingly self-serving and completely US-centric as many of the prescriptions are beggar-thy-neighbour variety.
The book is unique for its focus on the history of the global political economy. The author is a devout Keynesian, which allows him to be equally harsh on the free-market theories of Hayek or Friedman as well as the communist policies espoused by the likes of Marx.
Through the horrors of the twentieth century, the book easily slams down every form of political extremism. At the midpoint, it becomes clear that any group that serves itself or an ideology - irrespective of whether political or economic - is naive at best in the assumption that all societies' ills could be solved by sticking to pure theories penned in some books. The end results are almost always far worse when such ideologues use their powers to suppress their internal and external dissenters and refuse to see the most obvious harmful results of their policymaking or politics.
Alas, in trying to promote the case of Keynesianism - re-branded as democratic socialism - the author falls prey to some of the same issues that face the ideologues of other types. This is particularly staggering when we are on the verge of another inflation era globally.
One could author a book with disagreements on the book's take on the era since the 1970s. The author does not even mention how the decades-long, post-WW2 boom was partly because of the low base start and partly also because of the policies that borrowed from the future (ie, led to the corrections of the 1970s).
Another driver of that era was the standing start of the Global South that allowed the already-ahead Global North to keep outperforming. Global South also took longer to get rid of some of the ideological, extremist political, and economic ism's, prolonging its plight.
By many measures, at a global level, the world's least privileged are living more, have materially better access to basic needs, have closed the gap on information/knowledge access substantially in our information age, and are being far less discriminated against than ever. There are still too many ills in the world to self-congratulate, but the author refuses to recognise that the trends on these were not necessarily positive in the decades he yearns for - not from the viewpoint of the world.
Keynesianism, like Capitalism or Communism, becomes too extreme as a stand-alone contender theory to solve all economic issues. Communism's failures are in its suppression of individual rights, its tendency to corrupt its powerbrokers because of the lack of checks, and concentrated, inflexible decision-making on inadequate information. Capitalism - in its purest form - lacks humanity, tends to runaway inequality of all kinds, and does not have enough protection for those left behind. It is also prone to excessive cycles that hurt the unprotected the most. Keynesianism's underbelly is in inefficient state policies, the populism that invariably gives rise to inflation, and the crowding out of the private sector, including in innovation.
The reality is such that any set of economic policies - whether in pure forms or as a mix and with its roots in trying to solve the worst problems of the previous set - will create its own problems over time. The macro policies, by definition, are applied at mass levels - which means there are always some who will be left behind in some ways, and over time their plights become bigger than other positives that accrue from these policies elsewhere. A pragmatic society, with a policymaking class that is not focused on working for themselves or any ideology, will have to keep shifting and shaping to remove the excesses (particularly the harmful ones) while never compromising on society's basic rules and norms. This flexibility is most difficult where those in power are set on any fixed goals - whether in boosting growth, reducing unemployment, or fostering equality - for a long time and/or wedded to a particular theory.
A slavish Keynesian approach causes governments to over-extend. While being morally and even politically correct, policies of subsidies, transfers, guarantees, and debt forgiveness, create obvious rot of a different variety after a while. Notwithstanding the fact that Keynesian or other forms of socialistic policies do not come in one form, none of these are forever right or wrong.
Back to the book: the book is a great read up until a point, and the reader's enjoyment would then depend on how much agreement they have with the author's economic preferences....more
The book is worth reading for the case studies or stories selected. There is a lot to dislike from what is omitted (every knowledgeable reader will haThe book is worth reading for the case studies or stories selected. There is a lot to dislike from what is omitted (every knowledgeable reader will have a long list of examples that should have been included), a rather negative tone (except for the positive message in the last paragraph of the book), a lack of comparative analysis, rather cliched suggestions at the end, and a lot more.
The author does an excellent job narrating half a dozen historic examples. These well-written episodes provide a lot of good, relevant information that will help readers see the arc of how today's corporates came into being. Even while the author does not explicitly talk about what happened in communities that adapted to this route of doing collective work late, the examples are clear enough to help readers see the changes wrought themselves.
A quick, easy, and unique read for what is offered....more
The Illusion of Control covers all the standard concepts linked to risk management. While the author props up to shoot down many a strawman to create The Illusion of Control covers all the standard concepts linked to risk management. While the author props up to shoot down many a strawman to create the feeling that he is making some radical new points, there is almost nothing radically original. Readers new to the topic might find the book a good introductory guide, but it is unlikely to provide new insights to those familiar.
Awareness of risk management tools or their importance does not make anyone less vulnerable in the financial world. Adherence requires enormous discipline and continuous training. Many professionals could use the book as a refresher despite familiarity with the topics covered. The book's discussions might just prompt some to re-check something long forgotten, making a quick read worthwhile.
The author's arguments are straightforward. Criticisms are largely reserved for nameless policymakers - keeping the content even less controversial. The book's excessive focus on risks measured in the form of liquid securities' price movements makes it miss many other measures of risks, though. The book barely mentions the importance of balance sheet analysis, rating agency models, evaluation of qualitative factors like management quality, liquidity and opaqueness of structures involved, the keyman risk, and a number of other tools employed by loan officers, investors in private markets, or even those in public markets.
The author's arguments against artificial intelligence (for whatever it means) expose the book's underbelly - ie, its inability to discuss anything recent and forward-looking. The reality of risk sciences, more than anything else in practical life, is that what is measured and managed is a function of the available tools. As tools evolve, so do methods and practices. Discussing risk without discussing the latest in data sciences or criticizing "artificial intelligence" with vague generalities is equivalent to discussing modern physics with Einstein's discoveries and suggesting sciences stop there.
The author's recommendations are often towards models that are too static (with the changing inputs) and increasingly archaic. From calculators through spreadsheets, applications providing ever more complex statistical results, and programmed databases through to machine learning algorithms now, Riskometers are constantly changing. The roles of data and processing power continue to rise, while the input of human decision-making - still critical - continues to evolve (and need one daresay, diminish). The new-age risk models - which too will surely fail - even at the most unsophisticated organizations use analysis far more complex than the ARCH, value-at-risk, etc. invented decades ago. The book's understanding of what artificial intelligence means and how it is changing is plain wrong and self-serving (to the criticisms offered).
The end sections have other fears, which are also made up. For example, the author worries needlessly about everyone using the same risk models in a couple of contexts without realizing the real-life participants' needs to do better risk management than their peers as a competitive tool. While risk models are never perfect - as the author shows, this is theoretically given with reality in its infinite potential always shapeshifting to fill the corners left vacant by limited risk models - few prudent actors stop at implementing the bare minimum suggested by policy directives. Of course, it neither means policymakers have no roles to play nor implies an absence of nefarious players ignoring the most elementary guidelines for ill-gotten gains. The main point the book misses is that risk management is more in the intent and details, as it needs to use as much data/processing power as possible while also having the best human oversight. ...more
The End of the World reads like a political manifesto. Most of the book will resonate well if the reader is an American nationalist, particularly a MAThe End of the World reads like a political manifesto. Most of the book will resonate well if the reader is an American nationalist, particularly a MAGA-believing Trump supporter. Otherwise, a lot in the book would be so deeply offensive that most readers are unlikely to retain their objectivity enough to pick the good points in between.
It must be recorded that the author declares himself a democrat as well as an internationalist in the passing. He is definitely not a climate-damage denier. Some sections support the climate claims, although they too are used more to prove that those the author likes will gain and the others will perish, rather than for any other genuine purposes.
In summary, the author strongly believes that almost all non-Americans are people without resources, industry, innovativeness, and any good institutional structures. These folks - variously called lazy, without creativity, fractious, herd-like, but thankfully not identified as having wrong religions or skin colors - have benefited from America-sponsored, America-created globalization of the last few decades. American sacrifices - something he explicitly mentions - made it possible for the rest of the world to have decent economic existence. The rest of the world has grown as the US, as per the author, sacrificed some of its. The book's first conclusion is that this is coming to an end (although it often reads like he desires rather than predicts it).
To be clear, the author has a concise list of nations that he favors. Many are preferred because their populations are not falling, while others are because of positive relationships with the United States. His preference order starts with the favorites as France and Argentina, followed by Sweden, Japan, UK, Colombia, Canada, Mexico, Singapore, Germany, New Zealand, South Korea, India, and SE Asia/Australia as a region (I might have missed a couple). However, almost none of these are seen as able to survive independently but could be worthy protectorate candidates for America. The rest are so doomed that at a certain point, the author even predicts a billion or more (of course, from the places he dislikes, with the most intense dislike reserved for China) to perish.
The author can and does offend anyone who does not belong to his echo chamber (effectively people who believe in perpetual population growth, fossil fuels, Southern American values/beliefs/lifestyles, apart from the belief that no one except the US can truly innovate and grow). His tone on American Exceptionalism is designed to denigrate everyone else. The basic idea is to close the US economy because the US can not only survive easily without others but also do far better relying on its own resources and workers (particularly from the South, including Texas) with occasional help from Mexico and a handful of others. Such closing of the US will almost send the rest to doom because of their inherent inadequacies.
In terms of the content, the book is littered with errors, not just while demeaning every other economy's ability or promoting American supremacy/isolationism but also while making points on topics like demographics or the impracticality of green energy. There are multiple good observations on how little green energy has contributed, agricultural challenges, and changing demographics. Still, most points fail to make a good impression because of the quickly drawn and often-disconnected, extreme, biased conclusions.
With this book, Mr. Zeihan may have significantly boosted the chances of being invited for a senior government position when a nationalistic leader becomes the US president in the future. This work should not be ignored for its potential impact on policymaking despite all the flaws....more
The Price of Time, in the best case, is a misnomer. The book is not a story of interest rates despite the occasional attempts to weave them into the nThe Price of Time, in the best case, is a misnomer. The book is not a story of interest rates despite the occasional attempts to weave them into the narrative. Its first part provides summaries of a few most celebrated historic bubbles, followed by a long, unstructured diatribe on the state of current markets, economic structures, and policy frameworks.
There is nothing wrong with these topics. The author's attempts fall short because of how the content appears manipulated, like the title of the book, to emphasize his discomfort with the way things are. The author is right in pointing out numerous current ills from the extreme and rising inequality to market valuations, corporate abuses and policy adventurism, real-life reflexivities of financial events and externalities including climate damage, etc.
The author is not alone in listing these issues. These topics are covered continuously by a rising horde in a far more effective manner almost daily in books and journals. This book has little primary research. Worse, its reliance on the points made by others is so inconsistent that the arguments often lose credibility.
For instance, the author would lament the lack of creative destruction in one paragraph but have long sections on individual companies that go bust. He would appear to favor the Austrian school of thought and Hayek, but still, have digs at Greenspan's connections with Ayn Rand or the regulatory failures in controlling the powers of today's giants in some other sections.
The inconsistencies are worse when the author discusses two sides of any interest rate level. The book would criticize how low rates hurt the pensioners relying on interest income, but mind savers benefiting from rising wealth levels of financial instruments. The author never realizes how much the two groups overlap and why retirees worldwide have not gone up in arms against low-interest rates decades later. Take another argument in the same vein: the author would criticize low-interest rates for luring students and consumers of all types to borrow but would still want funding available to these groups all the time for the betterment of the masses.
Once again, the conclusions are not wrong. The problem is the ad hocism in the arguments used to support them. It is ok to use quotes from both Marx and Smith or Keynes and Mises to point out any unsustainability, but when it happens too often, it all begins to jangle. For example, the author does not like central banks because of their lack of policy framework. He seems to believe in the Austrian worldview that argues against fiat money, seen as the leading cause of the boom-bust cycle in the prices of financial assets and possibly also real-life goods/services. The book does not like cryptocurrencies, though - and for all the right reasons. Somehow, the author sees a solution in government-issued digital currencies...go figure!
The damage because of the lack of consistent argument framework is most when the author has to turn prescriptive. Mercifully, the book has little to offer on alternatives, although there is a section full of platitudes at the end.
A final word: History provides hardly any examples of economic successes without attendant financial/property market boom-busts, a point that goes unacknowledged. Every bubble-bust-prone system has not progressed consistently over the long term, but it is difficult to think of any society that has grown well over decades without boom-bust cycles. Unfortunately, perhaps. ...more
There have been numerous excellent books on financial market bubbles and busts. Such books excel in either explaining the factors that cause extreme pThere have been numerous excellent books on financial market bubbles and busts. Such books excel in either explaining the factors that cause extreme price movements (behavioral and/or policy) or describing the vivid details of the frenzy on the ways up and down or proscribing policy steps to avoid their repeats. In fact, the best of them do all three well. This one does neither.
For most parts, the book reads like verbal descriptions of charts showing extreme price movements. The author cannot stay away from the word "speculators" for long without ever defining how he would separate these "devils" from other types of investors. One feels that the author is against any liquid securities, but he also abhors wild price swings in illiquid assets like art and real estate. There is no support for allocated capital decisions like in Japan, even when the author does not believe in capital allocations done by market forces.
Financial market manias exert enormous costs. Whether this price is bearable for the benefits markets generate is one debate. Still, smarter critics describe how one can reduce the extremes of bubbles in important securities, assets, or instruments without taking away most benefits. Many commentators also recognize that bubbles and busts are an inherent part of capitalism even if one finds a way to reduce liquidity in public markets (as seen in bubbles in private equity now or real estate since time immemorial). The solutions are primarily in policymakers finding the courage to stand against extreme market forces even at the chance of being wrong rather than allowing markets to be. For brave policymakers, the policy tools are not just monetary but more in tax and regulatory areas. Unfortunately, most policymakers refrain from going down these paths. In their absence, bubbles and busts will only become more frequent and extreme given the technology innovations leading to far better market access. ...more
The highly informative book on an essential and less-addressed market/economic sector has everything right except the tone.
The stories that start froThe highly informative book on an essential and less-addressed market/economic sector has everything right except the tone.
The stories that start from a small group of traders in the seventies and lead to the activities of the current giants are disjointed and yet compelling. Most of them are not well known, like the stories of famous bond or equity investors. The authors are right to claim that these working-in0the-shadows individuals and firms have had a larger impact on global affairs than their celebrated public market contemporaries who dominate the financial journals.
The authors do a good job throwing light on the many murky activities of these entities as they amassed staggering wealth. The authors rightfully claim that commodity traders alter the course of the lives of many millions globally and the political and geopolitical history of many nations.
Nevertheless, the book lacks balance. Perhaps, it is enormously difficult to provide balance while discussing this field of goods essential to human lives and with actors and practices that have been downright abominable from the time immemorial.
Let's start with a few undisputed facts. We all need resources - from food to energy to metals and others - to lead a decent life. What we need is not evenly distributed around the planet. Monopolists of all types have tried to corner the production of these resources from the era of the feudal lords to the miners and energy barons using unsavory means. It was easy for all these producers to recognize the power of the larger size (or the ownership of a higher amount of whatever resource they were in) in their quests to control the market. This led to power grabs, corruption, and exploitative production practices of all kinds by the most powerful producers, with some joining politics and others moving into commodities after they got their political powers.
Our history and literary books are filled with the events caused by commodity-control methods even to this present day. We all wish we could banish all these producers out of regular modern circles and still continue with a good economic life. The utopian fantasy - reflected in the book - is that politicians from a group of large, rich, democratic nations would come together to clean up the commodity production space. In this dream world, all the much-needed resources are within democracies, produced in the most sustainable and moderately profitable ways without any exploitative labor practices and ideally without monopolies.
It is important to keep striving for such a world, but it is equally important to understand that we are not in such a utopia. Some idealists' overzealous bans, sanctions, or price/trade controls could inflict more miseries on the consumers and users. Practically, intermediaries - like those discussed in the book - will provide those layers between producers that nobody wants to be seen dealing with and the users who need resources for their daily life.
Ever since the advent of modern trading intermediaries and financialization started by them, the world has seen fewer shortages of commodities than ever before. Debatably, prices have also been less volatile, with global consumers allowed to have a higher proportion of income left for non-commodity expenses. The trading companies have somewhat counterbalanced producer monopolies across commodities. As high as their absolute gains look, as reported in the book, we need more studies to show whether intermediary profit margins are up or down on a long trend and whether consumer surplus is growing or shrinking versus the producers because of these trading companies' activities.
One should not condone many acts of the trading companies. Those who violate laws should pay for their acts. The book is right about these. It is not right - at least in its tone - where it fails to discuss the important, practical role played by these intermediaries in our world. Commodity companies will continue to exist in the coming decades. They may have different names, with most players going through the inevitable personal boom-bust cycles despite the aggregate profits on an uptrend. In a world geopolitically divided, their roles will become even more critical to provide the veneer of political acceptance to sanction- and countersanctions imposing classes. They will also come under far more scrutiny because of political divisions, ESG/climate reasons, and the return of the resource price inflation....more
Some ideas are so preposterous that when they come from respected authors and thinkers, a reader must pause to reflect on own sanity and mental framewSome ideas are so preposterous that when they come from respected authors and thinkers, a reader must pause to reflect on own sanity and mental frameworks. Are not the best ideas in the world were those that sounded funny all around when first proposed? The author makes no bones about claiming how revolutionary his ideas are. The book castigates any doubters or non-believers as those enslaved by the forces of capitalism.
The global economic system is not working for the vast majority. Every suggestion on improvements and alternatives should be viewed seriously, even if the evidence of any non-market systems yielding even half-decent results for the downtrodden is scant. That said, one must remember that many well-intentioned ideas are also plain ridiculous. No amount of the powerful rhetoric on how the current system is not working can make those ghastly ideas worth thinking about. This book contains multiple ideas of this variety - once again, regardless of powerful arguments on what is not working currently and good intentions.
Take the concept of hierarchy-less organizations that is at the root of one share, one vote corporate structure. The author clearly does not envision a military, or a political system or judiciary based on consensus-based working. Somehow, he believes that a phone can be built, or a university run, or people hired without empowered decision-makers. The sketchily presented DAO-like system may work in specific cases. However, didactic claims that such commune-like builds worked for farms or with hunter-gatherers are not enough to demand one for industries and organizations of our era. Parliaments and senates have done little to inspire confidence that a nation can run without presidents or cabinet ministers, let alone companies providing all the goods and services we need. Yes, there are many ways to prove that the current system is sub-optimal, but there is little to prove that the one offered in the book is not significantly inferior. Imagine if this book's content was modified through votes by everyone involved in the publishing process.
In another place, the author wants the nations who create surplus goods or services to provide them effectively free (or at a discount - in a roundabout way) to the nations who cannot balance their books on trade alone. This proposal is presented to ensure that no nation can indebt another or have claims on the other's assets. The author's background helps in understanding the cause of this impractical proposal. Under the author's leadership, should one assume that Greece would happily welcome tourists at deep discounts from other emerging countries with bilateral trade deficits? Or even if such surpluses are punished only at aggregate, the author's world Germany or China may still shut the shop beyond a point rather than keep working for no gains? One does not need to have the Capitalists fleeing to some Ayn Rand devised communes (Atlas Shrugged) to see how global trade will collapse to a halt if trade surpluses are not allowed to be capitalized.
The fact that the author wants to maintain the nation-state boundaries under his proposals is politically expedient but inconsistent with everything he is clamoring for. Can the author's system be equally just if the money deposited in an India-based newborn's account is different from a US-based? If someone from a sub-Saharan African country wants to work in Greece or live in Athens, why should the person's claim be lesser compared to a disenfranchised in those communities? After all, the author proposes a near elimination of property rights in the book and more vote/lottery-based systems for homes, just like for jobs.
The author's parallel-world utopia does not have markets, private banks, indebtedness, managers, and also information privacy! As one is not allowed to ask much about how goods would be distributed in such a system when something is not readily available to all who desire (expect answers to be based on more lotteries!), presumably one cannot provide a counterargument assuming bad actors too. The assumption that anything anyone does digitally is public will cause equality is a complete misreading of the human psyche. The smartest, most ambitious ones would find the most innovative way to suppress if the more susceptible ones are not afforded any privacy.
The list of proposals is vast, disconnected, and inconsistent. Given the story structure, the short book has even less space for any genuine discourse. The nature of the story allows the author to arbitrarily pronounce how his construct would make everyone happy without providing any arguments on the operational or behavioral nitty-gritty. Somehow, in this libertarian system, there will not be any opposition, demand would stay manageable, supply optimum, and everyone content with work and rewards.
As discussed above, the author's intentions are right. He dares to make a case for a society without many of the cherished, most celebrated parts of the current system. Yet, the author's inability to see the sheer impracticality of not just one but multiple proposals cast a dark shadow on anything potentially useful....more
This is a remarkable book on one of the least discussed, most important chapters of financial market history. It helps that Mr. Napier is not another This is a remarkable book on one of the least discussed, most important chapters of financial market history. It helps that Mr. Napier is not another theoretician or a passive observer penning a narrative based on secondary research. He is someone who actively shaped the views and perceptions of key participants during and after the event in Asian markets.
The book derives its material from the author's own written reports in real-time during those long months. The first-hand approach has unique positives and negatives. The author spends a disproportionate amount of material on the organization he worked for, which would be of as much interest only to people connected with the entity like this reviewer (who also worked for CLSA during those times and had the honor of interactions with the author too).
The author presents a solid list of factors that led to the economic and financial crisis in multiple Asian countries in 1997-98. Partly due to his own work - which has been incredibly popular and well-known in Asian markets ever since - the listed causes are unlikely to surprise anyone familiar with the crisis. For the unfamiliar, the book is a one-stop destination to learn about the events that have affected so much in Asian/emerging economies, markets, and with multilateral institutions to this day.
The reviewer will take the remaining space to provide his views on what led to such an unprecedented collapse. Yes, Asian economies had unsustainable currency regimes, unprofitable over-investments, corrupt business practices, terrible asset-liability mismatches in bank/corporate balance sheets, bubble-like asset prices, heavy debts, etc. However, none of these factors individually or collectively were at a level to cause the collapse witnessed. Economies, like human bodies, are always imperfect. These imperfections cause cycles we witness once every few years. However, what happened in Asia - where multiple economies had almost every domestic bank writing down equity to zero and with an unprecedented wave of bankruptcies - cannot be explained simply by pointing fingers at the usual factors, however despicable.
Asian economies witnessed a classical bank run, except it was not by depositors and not necessarily always on banks. Relatively inexperienced investors with their first-time investments in Asia suddenly took fright due to a combination of factors (well discussed in the book). Still, they made everything worse through vicious cycles caused by the same actions. Economies with vastly different fundamentals that did not share almost anything common - like Indonesia and Korea, or HK and Thailand - got swept by the ever-rising levels of sell-offs driven by the market, economic and political events caused by previous rounds of panic.
A doctor does not try to treat the chronic diabetes of a patient on the day he is brought in for life-threatening fire burns. Walter Bagehot detailed the need for countercyclical monetary policies over a hundred years before the events in Asia. In times of investor or depositor panic, it is critical to support liquidity and infuse confidence to ensure that insolvencies of some do not lead to illiquidity-driven-insolvency for many more.
As expounded by Galbraith and many others, 1929 crisis was made worse because of the lack of such measures. It was worse in 1997 in Asia. Theoretically, regional central banks were constrained by exchange rate pegs (still remnants of the Bretton Wood), but this argument does not fully reflect the actual realities. In IMF and developed world public/private institutions, there were an unusual number of monetarists and Austrian school believers who would push for higher interest rates and prevent any regulatory support at the worst possible time.
The crisis ended when the Federal Reserve implemented a series of unexpected cuts in light of the collapse of LTCM. LTCM's woes were partly due to the Russian default, which was also swept away by the same confidence crisis that engulfed at least five Asian economies earlier. If the Federal Reserve had not ended the vicious cycle, the contagion could have consumed many others, including HK, which got saved by the skin of the teeth through a staggering market intervention days before LTCM collapse. There was an attack on HK markets/systems a year before the large one in 1998, and without the arrival of the massive TMT bull run that started with the Fed's policies, there would have been more.
The countercyclical, market-supporting backstops prevented Asian-crisis equivalent vicious cycles in 2008 and 2020. Unfortunately, such proposals were anathema in 1997. Every Asian economy had imbalances then, as now. However, it is reasonable to assume that the domino-like collapse of the era that led to entire financial systems getting wiped out is unlikely to repeat as policy errors played a huge role in making things worse. It also did not help that none of the regional markets had a meaningful local investor base in those early market days. There were just no significant investors with different views or investment horizons.
The aftereffects of the crisis are strong even now. Asia reduced its dependence on debt-based foreign inflows in favor of equity-based that participate in losses and largely abandoned rigid exchange-rate systems. Corporate and banking sector regulations improved markedly, partly as a result of the crisis but also because of the governance-related changes globally. Equity markets became deeper with a substantially larger participation of local investors and institutions, even as the knowledge of Asian economies and markets deepened with foreign institutions who hired more employees whose background is in the region. Corporate structures became simpler and transparencies improved.
The crisis-induced transformation changed the global economy too, none more than the accepted drive towards a build-up of large piles of foreign exchange reserves, built through better current accounts that are partly due to the acceptance of weak exchange rates. The genesis of the second leg of China's rise was in the crisis. When one looks at the overall growth path of South Korea or HK, the Asian crisis proved to be a cyclical dip, while the same - politically and in economic parameters - was not true for the economies in Asean. To a degree, the crisis that is dubbed as the Asian crisis dealt far bigger body blows in terms of investor flows and interests to the smaller economies in Latin America and EMEA.
All that said, there was so much that was preventable in a crisis that was only partly a result of fundamental factors. The contagion was made far worse by the wrong-headed policies recommended by supposed free-market champions and investor classes that lacked diversity. Asian crisis policy response was equivalent of if on the day Lehman collapsed, the Fed had withdrawn liquidity or like the last week (in 2022) when the Nickle market seized, the LME/Western banks had not intervened in the name market-clearance or necessary bloodletting. Markets that freeze up like they did in Asia in 1997 need strong, unqualified, and repeated (until successful in stemming the rot) intervention; when that does not happen like in 1929 or in Asia in 1997, the real-life damage is ghastly. These are the points not covered in the book.
Back to the book: it provides one view on what caused the crisis, although it fails in drawing any lessons from what happened in the following 25 years. Still, this is a must-read for anyone interested in financial market history....more
Lombard Street is a much-needed, jargon-free treatise for those thinking about the viability of the cryptos, defi, and the like. While the messages heLombard Street is a much-needed, jargon-free treatise for those thinking about the viability of the cryptos, defi, and the like. While the messages here do not rule out a decentralized financial system without a lender of last resort or a centralized policymaker/rule-setter, the book will provoke many thoughts and spawn ideas in the minds of both their believers and skeptics.
Of course, the nineteenth-century authored book is simply the work of a genius; this aptly celebrated, landmark work helped found the first central banks and has influenced central banking ever since. Walter Bagehot's clarity of thoughts and writing in this book must have helped quash many needless policy debates before they reared their heads for decades while shaping conversations in many other directions.
For instance, the book cleared the way for the emergence of a central, government-owned, non-profit, competent person (as against a minister aka politician) led lender of last resort across the world. The book makes a comprehensive case for countercyclical policies by this institution in times of deep distress. It equally provides solid justifications for various lending or liquidity rules during normal times. As a result, the needs behind capital adequacy norms, reserve requirements, or central bank liquidity supporting/moping operations have rarely been debated even in highly non-capitalist systems until the arrival of the crypto crowd in recent times.
It may not matter how much of it all started with this book and the author to current readers. The leading utility of the book is in all its indirect messages when repurposed. The strongest crypto believers are highly dismissive of central banks for their fiat money issuer role. In some ways, the book has nothing on fiat currencies as it was published for a system that believed in the gold standard. Yet, the path paved here (by establishing the central banking processes that need the creation of reserves - aka money - from nothing when times are tough) was invariably going to lead to the emergence of fiat currencies a few decades hence.
That said, the book is the most lucid evidence of how history has been rather than the way many modern decentralized system proponents paint it. Centralization - through the central banks - was not borne out of the desire to print an unlimited amount of money or to invade anyone's privacy or because the intermediaries wanted to make more money. It happened because the decentralized financial world of the mid-nineteenth century (and before) had too volatile cycles borne out of regular market/liquidity/confidence forces. These cycles that first manifested themselves in money market flows and prices had to be pruned before they became circular and wreaked far more real-life damage when allowed to go on unchecked. As the author knew then and we all know now, central institutions like central banks do not solve all problems at all times, plus they come with their own "side effects," but a world without such institutions and attendant rules existed before this book was far worse.
Once again, this jargon-free book was the first paper that showed why a central institution was needed to bring order to a completely decentralized financial system that existed at the time. It was like that era's Satoshi paper! This reviewer cannot imagine how a decentralized system without such an institution can function for long in real life with repeated confidence and liquidity extremities that are a regular feature in trading markets. Real-life with real people and activities cannot afford impacts arising from unchecked financial gyrations because of the vicious cycles/circularities they create. Maybe, there is a decentralized system possible without such gyrations, but that's not what the crypto crowd is attempting to create when they discredit the current centralized system for its money printing and privacy-related flaws. ...more
The book is a treasure trove of new information on the centuries-long monetary history of a society (which happens to be China). While its content mayThe book is a treasure trove of new information on the centuries-long monetary history of a society (which happens to be China). While its content may have value for many political historians of China or East Asia, there are numerous things of all kinds to learn for monetary economists.
To be sure, the author does not spend adequate time on implications or theoretical lessons as on numbers and event descriptions. Comprehension becomes even more difficult for readers unfamiliar with Chinese history or those who struggle with Chinese nouns/names.
The most important lesson from the book for this reviewer is that currencies and monetary policies have had vastly different forms and results over time. Historically, perceived value in any non-specie currency was primarily a function of the trust and legitimacy of the issuing rulers. Once past this, acceptance in pre-industrial communities depended on the imposed use cases - first and foremost driven by the acceptable mode of payment (as well as the amount) for taxes.
If Chinese monetary history provides good evidence to bolster chartalism, there is much more ammunition in the book for money supply monetarists. With different forms of fiat currencies in issuance over almost a thousand years, China's political history has examples of ravages wrought by both excessive and deficient money supply.
There are tales of instability caused by the uncontrolled private money-minting for present-day policy practitioners. Less useful are flows instigated by inefficient markets and exchange rate arbitrages. While linkages between monetary and fiscal policies are obvious to any economist, the book provides good examples of connections between money and politics/geopolitics.
This is not an easy read but for the interested, here is a unique history that leaves one with many things to ponder....more
Red Roulette generates many conflicting feelings, irrespective of one's views on China's political and economic systems.
Clearly, it is a brave tell-alRed Roulette generates many conflicting feelings, irrespective of one's views on China's political and economic systems.
Clearly, it is a brave tell-all. This reviewer cannot remember too many insider accounts that are as revealing. The author provides corruption details involving numerous senior-most officials/politicians and their kins. Without the risks of any litigations, there is no equivocation in the descriptions or about the perpetrators. Yet, the author has taken huge personal/physical risks for himself and his loved ones from here to forever. No words are enough to appreciate this bravery.
The other side of the same coin is that the author has thrown a lot of people under the bus who will not have any avenues to defend themselves. This is an account of someone who feels terribly slighted. The pages are used to hurt everyone resented. The book would have invited many defamation suits if the aggrieved parties had recourse in Western legal systems. As much as the author tries to present himself as a relatively passive bystander who just happened to become immensely wealthy, there is a boatload of self-incrimination; the author may have some Western regulators too looking at his past activities by now.
There are two sides to the well-presented Chinese story too. The high-level corruption exposed would make even the biggest Sinophiles cringe. Details of numbers and people are so eye-popping that one cannot use the old ruse that such corruption exists everywhere.
And yet, the completely one-sided book that discusses the system as made up of only crooks and thugs fails to realize how China is much more than an infrastructure story. There are plenty of examples of countries that had some great years and decades on the back of infrastructure and buildings facilitated by corrupt politicians. Unlike in those cases, the Chinese economy was able to transition to mass consumption and innovation since the heydays of around 2010. There must be some extraordinary policies and actors who ensured that the system made the rare leap.
The Platform Delusion does a great job taking the shine off the companies everyone loves, at least in their investment portfolios. The messages here aThe Platform Delusion does a great job taking the shine off the companies everyone loves, at least in their investment portfolios. The messages here are unlikely to help anyone make or save money in any near term in the stock market. The messages are unlikely to wash well with the industry pundits and practitioners that endlessly sing the peans of network effect, AI, big data, and similar other jargons to project how tech companies will soar forever. And the same messages are not going to be appreciated by the industry opponents who too believe in the giants' extraordinary powers that they want curtailed.
The book is an excellent read for precisely these reasons: it says things as they are and are likely to be, rather than driven by any pre-determined investment, business, or policy goals. With the focus solely on highlighting where the consensus could be wrong in our extremely tech-optimistic world, the book could read overly critical.
When one looks back at the current period, the book's messages will appear extremely obvious. The world cannot have so many companies clamoring disruption and network effects all succeeding at the winner-takes-all prize that their valuations imply.
And, the book is not about the market ebullience. It is about the platform companies' proponents who do not get the nuances of genuine network effects. A business-worthy, exponential network effect is quite rare; examples in the book show how most of the time when a new company establishes new connections between interested parties, the advantages they bring to the table are either too small or easily replicable or imminently disruptible by someone else improving further. As the author shows, the same is true about the data: most of the new data generated is noise rather than a treasure trove waiting for exploitation by some AI, whatever it means.
For an already skeptic, the messages here may be heartening without anything radically new. And the rare believer or bull who happens to read the book, the messages could be needlessly frightening. The book may not convert anyone, but it provides good reminders in the world where almost all the other articles discuss the opposite. ...more
The Code presents a compelling case on the law being the real oil of Capitalism. One rarely comes across a powerful, original idea in a short statemenThe Code presents a compelling case on the law being the real oil of Capitalism. One rarely comes across a powerful, original idea in a short statement, like when the author asserts that an asset, intellectual property, financial instrument, or anything similar becomes capital only when legally codified.
A part of the book explains how capitalistic societies evolved only with legal shields on assets through various state-granted rights. Professor Pistor makes her case thoroughly, in a way only a good lawyer can. The rationales are especially forceful with the counterfactuals. In the author's hands, the dividing line between the leading and lagging market economies is not the varied implementation of free-market principles but their codification of capital.
As insightful as these arguments are, the book takes it a few notches higher with the discussions on the difference between private and public codes. State laws - or Public Codes - are not even a small part of the story of Capitalism. Lawyers' ability to draft contracts between consenting parties, or Private Codes, using effectively whatever state laws or jurisdictions they find suitable is the real driver.
Amid thickets of great insights of all kinds, the author keeps coming up with absolute gems. For instance, the author makes a convincing case when she argues how global markets can function with decent statutes from only a handful of jurisdictions - like New York or London or ISDA - since private players can shop around for the jurisdiction that works for them.
The book is particularly useful for the proponents or the opponents of smart contracts in the cryptosphere. Both sides will find a lot to ponder, even if they don't find anything to change their firmly held views. On the one hand, the supremacy of the Private Code should bolster the proponents' claims of the utility of quick, customizable, state-independent, smart contracts. The opponents will find more support in how the real power of any contract stems from the details and the resolutions that require lawyers, state coercive powers, and human negotiations ("no contract is ever complete" - another gem) rather than mere digitalization.
Many conclusions are extreme when taken verbatim. Do lawyers rule the economic world more than politicians, entrepreneurs, bankers, innovators, or consumers? The author's recommendations towards the end on what is needed to fix current economic malaises, notably inequality, are idealistic and in some contradictions to the arguments on how private contracts are shaped before. None of this takes away a tiny bit from the immense original and powerful nature of the book. ...more
Nirgunan is a friend for years. The reviewer must thank him for gifting a copy of the book and also mentioning my name in the acknowledgments.
It takesNirgunan is a friend for years. The reviewer must thank him for gifting a copy of the book and also mentioning my name in the acknowledgments.
It takes courage to provide a compilation of articles written over five years. It takes more courage to provide a post-script with an honest review at the end of each article of what worked and the lessons drawn.
Most financial journal articles have extremely short shelf-life. Nirgunan's articles are readable in this book despite the original publication date long before the present times because of the range of topics they cover. Each selected article imparts knowledge on a less covered market or sector or has interesting analysis that is valid even now.
Nirgunan's engaging writing style, always involving a quick story, makes the articles on the most arcane subjects relatable. The author is an honest analyst with a complete focus on fundamentals and disregard for the fads. He is an avid reader of history with a firm belief that most of it repeat. He has a value bias and a contrarian streak, although that is not a premeditated selection but a result of his analysis.
Investors looking for well-written, quick notes on dozens of well-discussed contemporary topics will have a lot to gain going through the collection. ...more
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