A thorough, authoritative postmortem, highly recommended for professional economists, scholars, and university students.
An international economist’s deep dive into the causes, consequences, recovery, and lessons of the 2008-09 financial collapse.
Elson (Governing Global Finance, 2011, etc.), a former International Monetary Fund staffer and World Bank consultant who’s taught at Duke, Johns Hopkins, and Yale, offers a study of the aforementioned crisis, which was triggered by the subprime mortgage market. As he digs into its details, he dissects the flawed assumptions that it exposed: the macroeconomic consensus that financial markets were efficient and self-stabilizing, credit-rating agencies that improperly assessed risks, and regulatory regimes that ignored “shadow” banks. He offers granular analyses of the responses by governments, central banks, and international bodies, such as the IMF expanding its governance from the G7 (Group of Seven) countries to the G20. He identifies systemic weaknesses, such as the lack of an international lender of last resort or a means to enforce capital standards. Elson also discusses how the crisis prompted a general rethinking of economic education, elevated debate around wealth and income inequality, and sparked interest in behavioral economics and complexity theory. He devotes the final chapter to summarizing 25 lessons, and the fiscal, monetary, structural, and policy reforms that they imply. Elson’s prose throughout blends erudition and experience. However, his pervasive use of the passive voice may distract some readers. Although he provides plenty of background regarding his various subjects, readers will still need some familiarity with such things as historical macroeconomic theories, equilibrium models, the Basel international banking accords, and sovereign debt restructuring mechanisms. Acronyms abound, and with no quick-reference list, readers may be forced to retrace their steps or search the index. Helpful notes appear after each chapter, though, and the pacing never falters. Overall, the book ably reflects a technocrat’s vision of progressively integrated international financial systems and governance. Recent counter-trends—such as the United Kingdom’s vote to leave the European Union and Donald Trump’s presidential victory—are conspicuously absent, presumably because the book was already in production at the time.
A thorough, authoritative postmortem, highly recommended for professional economists, scholars, and university students.Pub Date: Jan. 5, 2017
ISBN: 978-1-137-59749-6
Page Count: 255
Publisher: Palgrave Macmillan
Review Posted Online: March 27, 2017
Review Program: Kirkus Indie
BOOK REVIEW
BOOK REVIEW
BOOK REVIEW
The occasional distractions of pop-business cheerleading notwithstanding, if the book evokes a few creative ideas, it will...
Why think outside the box? Write business consultants Coyne and Coyne, “the key is to find just the right box in which to think.”
Readers may not have known that a famed Broadway producer, responsible for such hits as The Lion King and Beauty and the Beast, was also the father of the corn maze, an idea whose time, it seems, had come when he hit on it back in the ’90s. Corn mazes are now a big draw in some parts of the country, though the authors must be using faulty stats to set the number of visitors at twice that of the Grand Canyon. Why couldn’t we think of that contribution to American civilization? We can, write the authors—it’s mostly a matter of learning how to ask lots of questions that might generate the desired answer, which presumably is to hit it rich, in the manner of the “Z-1-4” (“zero to $1 billion within 4 years”) businesses they profile here. Enter “Brainsteering,” a gimmicky but, at least on the face, effective method for “consistently generating breakthrough ideas.” It would steal the authors’ thunder to describe this method too closely, but let’s take, for instance, their thoroughly useful series of questions meant to help pick out a welcome gift for the person who may have everything: “What was their favorite toy, hobby, or activity during the period of their life on which they look back most fondly?” “What event or accomplishment in their life are they most proud of”? The authors pepper their narrative with such idea-sparkers, with an appendix that is worth the cover price, and introduce acronym-tagged concepts that seem as if they ought to bear fruit, as with the notion of a “mutually exclusive and collectively exhaustive” system of investigation.
The occasional distractions of pop-business cheerleading notwithstanding, if the book evokes a few creative ideas, it will have done good service.Pub Date: March 1, 2011
ISBN: 978-0-06-200619-6
Page Count: 256
Publisher: Harper Business
Review Posted Online: Dec. 23, 2010
Kirkus Reviews Issue: Dec. 15, 2010
A unique examination of the limits of models and theories in understanding and predicting human behavior, and a nice...
A fascinating cross-disciplinary exploration of how and why financial and scientific models fail.
Derman (Financial Engineering/Columbia Univ.; My Life as a Quant, 2004) is a former theoretical physicist turned Wall Street financial engineer, or quantitative analyst (“quant”). Having previously written about the world of quantitative finance, he now sets out to discover why existing financial models failed to predict the economic crisis of 2007-08. Quants use mathematics and physics to create their predictions of how markets work; Derman argues that these models fail to account for the human element, or what John Maynard Keynes called “animal sprits.” Drawing on his experience as a child in Apartheid South Africa, the author exposes the failure of models and theories when applied to politics. By incorporating philosophy, physics, social theory and economics, he presents an eclectic, multidisciplinary discussion about what happens when models are taken too seriously and the human factor is ignored. “The greatest conceptual danger is idolatry; believing that someone can write down a theory that encapsulates human behavior and thereby free you of the obligation to think for yourself,” he writes. Derman draws intriguing connections between the language of physics and economics, and while the material may be complex for nonphysicists, the author’s prose writing is fluid and makes many of these complicated theories accessible.
A unique examination of the limits of models and theories in understanding and predicting human behavior, and a nice rejoinder to the equations-can-solve-or-explain-everything crowd.Pub Date: Oct. 25, 2011
ISBN: 978-1-4391-6498-3
Page Count: 240
Publisher: Free Press
Review Posted Online: Oct. 2, 2011
Kirkus Reviews Issue: Oct. 15, 2011
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