A supremely useful book for portfolio planning, though not the thing to give someone who’s inclined to worry about the state...
It’s a fraught time, writes hedge-fund guru Smick in this timely book. If the “Chinese juggernaut” doesn’t sink us, then class warfare and our spendthrift ways will.
Borrowing his title, obviously, from Thomas Friedman’s optimistic The World Is Flat (2005), Smick dourly notes that in finance, the horizon is near while the dangers lurk out of sight—“nothing happens in a straight line. Instead, there is a continual series of unforeseen discontinuities—twists and turns of uncertainty that often require millions of market participants to stand conventional wisdom on its head.” Seeing over the horizon is the job of sound analysts and good political leaders, who seem to be in short supply. Weathering the fiscal storms is ever harder for numerous reasons, one of them the declining vigor of central banks, another, in the United States, an accumulation of personal debt that threatens to put the economy into a Japan-like state of decades-long stagnation. Globalism, some would object, is a vehicle for weakening national economies, but Smick counters that “liberated global financial markets and free trade” are largely responsible for the creation of vast wealth in the last quarter-century (during which the Dow Jones Industrial Average rose from 800 to more than 12,000) and should not be unduly regulated, since economies seem to be slipping beyond the control of national governments. Instability will thus be the norm in the future, especially inasmuch as private concerns dwarf whole economies: The exposure of the Swiss bank UBS to the subprime mortgage meltdown was four times as large as the entire Swiss economy, Smick observes. Couple profligate habits with an ever-growing Chinese economy beholden to no one, and suddenly the future looks like a roller-coaster ride for even the most aggressive investor.
A supremely useful book for portfolio planning, though not the thing to give someone who’s inclined to worry about the state of the world.Pub Date: Sept. 4, 2008
ISBN: 978-1-59184-218-7
Page Count: 280
Publisher: Portfolio
Review Posted Online: May 19, 2010
Kirkus Reviews Issue: July 1, 2008
BOOK REVIEW
Madrick looks into the vast vessel that is the US economy and pronounces it half emptyand draining. In reiterating the declinist view of America's future, the veteran financial journalist zeroes in on the problems presumably caused by the sluggish pace of domestic economic growth (2.3% per annum) and stagnant state of productivity improvements (about 1%) since 1973. Prior to that year, annual gains in GDP averaged 3.4% and productivity forged ahead at a 2% rate. This more measured pace of economic advance has curtailed the nation's capacity to meet its social/welfare commitments, to remain competitive in key commercial/industrial markets throughout the world, and to keep personal income and living standards on an upward track. Further, he points out, inflation-adjusted losses in the domestic output of goods and services from 1973 to 1993 aggregated $12 trillion. To put the impact of contemporary shortfalls in clearer perspective, Madrick offers a brisk overview of the postCivil War era, when US business and wages were expanding at a healthy clip, thanks in large measure to the economies of scale achieved by mass production and mass merchandising. These, he asserts, not only helped fragment once-homogeneous outlets but also intensified mercantile rivalries and made it appreciably easier for start-up enterprises to enter hitherto closed markets. Despite the convulsive shift in its fortunes, the author warns, the American populace remains unwarrantedly optimistic about the shape of things to come. Brief allusions to higher taxes, shared sacrifice, income maintenance, and deficit reduction apart, Madrick makes no attempt to consider ways out of the socioeconomic fix in which he perceives the US. Withal, the author insists, the citizenry had best put paid to any comforting notion that self-reliance, rugged individualism, and other classic virtues guarantee ever brighter tomorrows. A credible worst-case evaluation of what slower economic growth has and could cost the American polity if the nation fails to regain its historic momentum.
Pub Date: Sept. 1, 1995
ISBN: 0-679-43623-5
Page Count: 208
Publisher: Random House
Review Posted Online: May 19, 2010
Kirkus Reviews Issue: July 15, 1995
BOOK REVIEW
BOOK REVIEW
An intelligible and generally absorbing rundown on how one of the world's best known but least understood financial institutions came to possibly terminal grief. In telling what he stresses is a story whose conclusion may not be known for some years, Economist correspondent Raphael makes a fine job of recounting how the underwriting collective known as Lloyd's of London became a major force in international insurance markets. He goes on to delineate the crucial role played by so- called Namesindividuals who put up capital in hopes of realizing handsome, tax-sheltered returns and assume unlimited personal liability for losses incurred by their syndicates. The author also inventories the financial wreckage left in the wake of epic storms (Andrew, Betsy, Hugo, et al.) and such man-made disasters as fire aboard an offshore oil rig. Withal, nothing prepared Names or their brokers for the havoc wreaked by obligations resulting from asbestosis and pollution-abatement claims in the US. These multibillion-dollar liabilities bankrupted hundreds of once affluent individuals. While the resultant litigation exposed a wealth of sleazy deficiencies at Lloyd's (inadequate or nonexistent disclosure of risks, overly venturesome underwriting, lack of accountability, self-dealing, and in some cases outright fraud), Crown courts have done precious little to provide surcease for Names whose lives are in ruins. Nor, despite a belated effort to professionalize a freewheeling enterprise based on trust or at least confidence, is there any assurance that Lloyd's can survive in anything like its present form. In chronicling the unresolved juridical conflicts between those with nothing left to lose and an institution whose blunders have made it an embarrassment to the UK establishment, Raphael offers more detail than may suit the taste of North American readers. On the whole, however, he provides a clear briefing on a financial fiasco whose consequences could prove earthshaking for insurers and insured alike. (12-page photo insert)
Pub Date: Sept. 15, 1995
ISBN: 1-56858-056-8
Page Count: 320
Publisher: N/A
Review Posted Online: May 19, 2010
Kirkus Reviews Issue: July 15, 1995
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