BEAR TRAP

WHY WALL STREET DOESN'T WORK

Haphazard critique much exaggerating the latter-day difficulties of the financial-services industry without addressing the implications of its ongoing—and convulsive—restructuring. Gibson (a Forbes senior editor) seems to equate Wall Street with the commercial investment banks clustered in lower Manhattan, but he turns to foreign brokerage houses, portfolio managers, mutual-fund groups, and commodities or stock exchanges when it suits his purposes. Arguing that old-line firms are in mortal danger, the author offers an audit of such problems as overcapacity, global competition, ineffectual regulation, ongoing advances in technology, resistance to change, and a willingness to incur substantive risks to collect the handsome fees or trading profits needed to offset a precipitous decline in commission dollars. In aid of his thesis, Gibson covers a lot of old ground, including Salomon's rigging of Treasury bond auctions and the delinquent bridge loans still on the books at overly venturesome securities firms. But he fails to explain what a make-over of the money game's once-clubby establishment might mean for individual and institutional investors, let alone private enterprises that need to raise debt or equity capital. In some cases, moreover, he appears not to know what he's talking about—e.g., in covering GICs Gibson refers to them as guaranteed income ``certificates'' (rather than ``contracts,'' as is proper). Nor is he always consistent: he asserts that spreads on fixed-income instruments have shrunk since Michael Bloomberg began vending detailed price data by wire; later, he quotes without disputing an analyst who concludes: ``Spreads are widening in all markets.'' Gibson goes hunting for bear—but his aim is way off the mark.

Pub Date: May 1, 1993

ISBN: 0-87113-534-5

Page Count: 304

Publisher: Atlantic Monthly

Review Posted Online: May 20, 2010

Kirkus Reviews Issue: April 1, 1993

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Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...

THINKING, FAST AND SLOW

A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.

The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.

Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.

Pub Date: Nov. 1, 2011

ISBN: 978-0-374-27563-1

Page Count: 512

Publisher: Farrar, Straus and Giroux

Review Posted Online: Sept. 4, 2011

Kirkus Reviews Issue: Sept. 15, 2011

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A declaration worth hearing out in a time of growing inequality—and indignity.

ECONOMIC DIGNITY

Noted number cruncher Sperling delivers an economist’s rejoinder to life, liberty, and the pursuit of happiness.

Former director of the National Economic Council in the administrations of Presidents Bill Clinton and Barack Obama, the author has long taken a view of the dismal science that takes economic justice fully into account. Alongside all the metrics and estimates and reckonings of GDP, inflation, and the supply curve, he holds the great goal of economic policy to be the advancement of human dignity, a concept intangible enough to chase the econometricians away. Growth, the sacred mantra of most economic policy, “should never be considered an appropriate ultimate end goal” for it, he counsels. Though 4% is the magic number for annual growth to be considered healthy, it is healthy only if everyone is getting the benefits and not just the ultrawealthy who are making away with the spoils today. Defining dignity, admits Sperling, can be a kind of “I know it when I see it” problem, but it does not exist where people are a paycheck away from homelessness; the fact, however, that people widely share a view of indignity suggests the “intuitive universality” of its opposite. That said, the author identifies three qualifications, one of them the “ability to meaningfully participate in the economy with respect, not domination and humiliation.” Though these latter terms are also essentially unquantifiable, Sperling holds that this respect—lack of abuse, in another phrasing—can be obtained through a tight labor market and monetary and fiscal policy that pushes for full employment. In other words, where management needs to come looking for workers, workers are likely to be better treated than when the opposite holds. In still other words, writes the author, dignity is in part a function of “ ‘take this job and shove it’ power,” which is a power worth fighting for.

A declaration worth hearing out in a time of growing inequality—and indignity.

Pub Date: May 5, 2020

ISBN: 978-1-9848-7987-5

Page Count: 384

Publisher: Penguin Press

Review Posted Online: Feb. 26, 2020

Kirkus Reviews Issue: March 15, 2020

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