The year is winding down, but before it slips away let’s review some of the more memorable titles that have appeared in the weekly Book Bits column that runs in this space each Saturday morning. Here are five economics/finance books from the 2014 archives that deserve a second look. I’ll follow up with five more next week. Happy reading!
● Panic, Prosperity, and Progress: Five Centuries of History and the Markets
By Timothy Knight
Summary via publisher, Wiley
With the financial markets seemingly careening from one crisis to another, it’s vital for today’s investors and traders to have an historical perspective on market performance during times of great turmoil. In this book, Tim Knight provides an exhaustive analysis of financial market behavior prior, during, and following tumultuous events since 1600. Making copious use of charts and basic technical analysis, Knight demonstrates how external shocks tend to create extreme reactions in the financial markets and how these predictable reactions provide opportunities for investors and traders to profit. Knight traverses five centuries of financial market history, from Tulipmania in the 1600s to the contemporary sovereign debt crisis.
● The Dollar Trap: How the U.S. Dollar Tightened Its Grip on Global Finance
By Eswar S. Prasad
Summary via publisher, Princeton University Press
The U.S. dollar’s dominance seems under threat. The near collapse of the U.S. financial system in 2008-2009, political paralysis that has blocked effective policymaking, and emerging competitors such as the Chinese renminbi have heightened speculation about the dollar’s looming displacement as the main reserve currency. Yet, as The Dollar Trap powerfully argues, the financial crisis, a dysfunctional international monetary system, and U.S. policies have paradoxically strengthened the dollar’s importance.
● Money Mania: Booms, Panics, and Busts from Ancient Rome to the Great Meltdown
By Bob Swarup
Summary via publisher, Bloomsbury
Money Mania is a sweeping account of financial speculation and its consequences, from ancient Rome to the Meltdown of 2008. Acclaimed journalist and investor Bob Swarup tracks the history of speculative fevers caused by the appearance of new profitable investment opportunities; the new assets created and the increasing self-congratulatory euphoria that drives them to unsustainable highs, all fed by an illusion of insight and newly minted experts; the unexpected catalysts that eventually lead to panic; the inevitable crash as investors scramble to withdraw their funds from the original market and any other that might resemble it; and finally, the brevity of financial memory that allows us to repeat the cycle without ever critically evaluating the drivers of this endless cycle. In short, it is the story of what makes us human.
● GDP: A Brief but Affectionate History
By Diane Coyle
Review via The Washington Post (Tyler Cowen)
If you are going to read only one book on GDP, Diane Coyle’s “GDP: A Brief but Affectionate History” should be it. More important, you should read a book on GDP, as many of the political debates of our time revolve around this concept. Can we afford our current path of entitlement spending? Was the Obama fiscal stimulus worth it? When will China overtake the United States as the world’s largest economy?
The answers all depend on GDP. In 140 pages of snappy text, Coyle lays out what GDP numbers measure, what roles they play in economic policymaking and forecasting, and how GDP numbers can sometimes mislead us, albeit not in the way many current critics suggest.
● Money: The Unauthorized Biography
By Felix Martin
Review via The Guardian
In The Importance of Being Earnest, the prim governess Miss Prism tells her young charge Cecily to omit the chapter on the fall of the rupee in the political economy textbook she has been instructed to study: “It is somewhat too sensational. Even these metallic problems have their melodramatic side.” And in Felix Martin’s stimulating and timely book we see how right Miss Prism was: money – metallic or paper – may seem deadly dull, but it actually stands centre-stage in today’s most important political and economic conflicts. Moreover, it is economists’ blinkered insistence that money is just a “technical” and relatively minor issue that explains why they, and their politician followers, brought the world to the brink of catastrophe in 2008 – and why they are conspicuously failing to rescue us from that crisis.