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And a couple more...

The Devil's Derivatives by Nicholas Dunbar (2011)

Dunbar was the Technical Editor at Risk magazine, which is not, as the name suggest about the popular board game where one seeks world domination but is the industry rag of the derivatives trade. Dunbar was a research physicist who got interested in the odd work that his erstwhile fellow physicists were doing in finance but ended up writing about it rather than doing it. The book is a great primer on the detail of how the alphabet soup of products and structures came into being and the gives a satisfying account of how this informed and was informed by regulatory measures, particularly Basel 2. He's not afraid of the detail, one gets, for example an account of how to build a shadow bank, or more accurately how two Citibank employees built one of the first. If you were worried about going to your grave without understanding what a conduit is, this is the book for you.

House of Debt by Atif Main and Amir Sufi (2014)

Essentially spinning out of some considered econometric work with county level US lending and house price data this throws some light on why lending lots of money to poor people to buy houses is a really bad idea for the economy as a whole. One of the things that irritates me about certain approaches to UK housing is what I think of as a "That's just the way it is" mentality. This book engages with the problems of the asymmetry of a mortgage contract written between a household and a big bank (particularly if the bank expects to get bailed if they screw up) and describes the advantages of replacing the standard amortizing mortgage with a product that has more of a debt-equity character. No sign of appetite to ram these changes down the throats of the banks as yet, so we'll probably have to wait for the next wave of the heart attack before these ideas get a hearing in the arena of opinion. This book turns up in the references of just about everything written after it which is at all related.

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Schiff is a populist free market fundamentalist idiot. His books may be easy to read and understand but his analysis is way off. Entertaining as he may or may not be, Schiff is essentially a tabloid opinion dispenser.

Richard Duncan is a genuine expert, with a solid track record of correct diagnosis before the event. He does perhaps believe in a global economic model but writes in very earnest fashion. Perhaps his big flaw is that he is not a raving populist who is seeking to appeal to our sadomasochist desires for sensationalist catastrophic paradigms or our fondness for simplistic and easily digestible dogma relating to some popular school of thought. Perhaps he realises that if any of the scenarios should come to pass,of the kind that many of us here are secret (or not secret) cheerleaders for, that the human consequences would be dire.

His writing style is of the dry and fairly technical variety and anyone contemplating reading his books would be well advised to get their best reading caps out beforehand. But this is one of the very few economic authors out there, who have their fingers truly on the pulse, with a track record out there published in black and white to prove it.

I have just finished reading Graeber's book. It is full of typo's, clunky prose, and some very tenuously linked theories on various aspects of economic development over the past 5000 years. With that said, I have to confess that this book is one of the most enjoyable and opinion altering books I have ever read. Graeber is not and economist, but an anthropologist whose understanding of how primitive 'economies' function, leads him to question the very basis of modern mainstream and alternative economic thought. This book is not going to give you any clues on the best way to invest or secure your assets, but if you fancy a complete paradigm shift, then this book is a must.

Graeber's book is very good.

Also, What Is Property?: or, An Inquiry into the Principle of Right and of Government - Proudhon. The first (as far as I'm aware) to advocate a Land Value Tax and displays capitalism for what it is - parasitism.

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More books...

Crash, bang, wallop: The memoirs of the HBOS whistleblower by Paul Moore

Not a straightforward recommend as this is an odd book. It is a memoir, so reasonably enough Mr Moore is prominent. Moore ended up as Group Regulatory Risk at HBOS and was famously sacked by Crosby and replaced with a Crosby acolyte with no experience of regulatory risk, Jo Dawson. I think the book is worth reading because it gives you an insight into how much was known internally about the very dubious practices at HBOS (which where also going on at the other lenders), for example PPI. There's an argument which is alluded to but not really taken on, which is whether the idea of corporate governance is just a sham or whether it can be made to work. It seems to me that Moore carried out his regulatory responsibility as if the governance framework was serious and had to be taken seriously but he existed in a culture where the executives needed a window dressing of governance to keep the FSA happy but knew ultimately that the FSA was toothless as the executive could go above the FSA's head to Gordon Brown should matters become serious. Also very interesting to see how there was a good route to go for criminal convictions against the executives at HBOS, but just no political appetite to follow through, even on the part of the Coalition government after 2010

Edited by Idlewild
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A Property-owning Democracy?: Housing in Britain by M. J. Daunton (1987)

A short, scholarly history of housing in the UK from the middle of the 19th century up to the mid-1980s. It is a historian's book and is as much interested in the merits of the competing interpretations offered by other historians as it is in where the story is (was? given that it's thirty years old) going. What it sets out to do, and achieves IMO, is to expose how many commonly held beliefs about how things were don't stand up to serious scrutiny, a key example being the idea that owner-occupation was always the aspirational form of tenure, making the point that a hundred years ago a wealthy individual would be sceptical about the merit of tying up capital in residential property, when they could rent a fine home and put their capital to work elsewhere for a better return. Riffing on Kipling's (not the cake guy, the poem guy) "What should they know of England, who only England know", what strikes me is the relative historical novelty of the idea that residential property is always going to give you massive capital gains.

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The Man Who Knew: The Life and Times of Alan Greenspan by Sebastian Mallaby (2016)

Won the FT Book of the Year award. It's a staggering piece of scholarship (and in hardcover is big enough to be hollowed out and used as rudimentary shelter, in a pinch). From an HPC perspective one of the fascinating things is the gradual development of the so-called Greenspan put. Mallaby makes the case that Greenspan's take on bubbles was that it was hard to spot them and hard to deal with them (and the Fed lacked good tools) so the best call was to let them inflate and then clear up the mess. This view was bred into the Fed's playbook through its experience of both LTCM and the Dot-com bubble. The criticism Mallaby makes is that Greenspan was wrong about how bad the mess could get. If you underplay the consequences of the eventual bust and the difficulty of clearing up the mess then it's easy to turn away from facing down the boom. But when in the fullness of time it becomes clear that you were just plain wrong about the consequences, then with the benefit of hindsight it is also clear that some form of more aggressive intervention to dampen escalating booms has to be part of the central bank playbook.

 

 

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Money and Banking in the UK: A History by Michael Collins (1988)

This is a bit of a monster. It's largely very, very dry and runs up to 1986 but (importantly for me) in the final section it gives a clear picture of the financing conditions in the UK economy when the boomers were having their HPI expectations embedded. A very sketchy way of looking at what happened is that during the Second World War (and in the period of austerity thereafter) the clearing banks took households' deposits and lent them to the government. By the time the book closes we've transitioned to the present status quo which is that households' deposits are lent out as mortgages. Also, with our faces pressed up against the glass thinking about when or whether to buy a house, longer run narratives about how the monetary system is changing are invisible. One of the things that has appalled me a little bit about the UK government's response to 2008 is the extent to which it has been business as usual for the big mortgage lenders and the extent to which dealing with their crazy excesses has been a technocratic matter farmed out to the Bank of England. It doesn't have to be like that. I was fascinated to read about the Radcliffe report of 1959 (nice brief intro to it here, sourced via the report's wikipedia page).

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On 3/7/2017 at 1:40 PM, Will! said:

I'm just finishing Life After Growth by Tim Morgan, which is very good.  He also has a blog, Surplus Energy Economics.  His central thesis: the economy is an energetic system, not a monetary system.  Money is merely a claim on energy.

..economics is an art not a science ..the beauty is the eye of the beholder....as the old adage claims....

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16 hours ago, South Lorne said:

..economics is an art not a science ..the beauty is the eye of the beholder....as the old adage claims....

Economics is a science when it's done correctly. Bachelier's work on Brownian motion and random walks pre-exists Einstein's use of the same ideas by several years. Fisher information is used to optimise experimental designs and in machine learning. Mandelbrot's earliest conjectures about fractal geometry were inspired by evidence of 'fat tails' in the distribution of cotton prices.

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I visited my library yesterday and borrowed: Making it Happen - Fred Goodwin, RBS & the men who blew up the British Economy by Iain Martin (2013).

I've read 100 pages so far. The paragraphs about Fred's time in charge of the Clydesdale bank in the 1990s have been quite interesting.

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Mark Blyth's desert island books:

  1. The Passions and the Interests by Albert Hirschman
  2. The General Theory of Employment, Interest and Money by John Maynard Keynes
  3. The Great Transformation by Karl Polanyi
  4. Social Origins of Dictatorship and Democracy by Barrington Moore
  5. The Rhetoric of Reaction by Albert Otto Hirschman

There's an interview too, very interesting as ever:

"So where’s the space between Smith and Keynes? To me, that is where you should look for how the world works."

 https://fivebooks.com/best-books/how-worlds-political-economy-works-mark-blyth/

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