Book Bits | 25 May 2019

A Brief History of Doom: Two Hundred Years of Financial Crises
By Richard Vague
Summary via publisher (University of Pennsylvania Press)
Financial crises happen time and again in post-industrial economies—and they are extraordinarily damaging. Building on insights gleaned from many years of work in the banking industry and drawing on a vast trove of data, Richard Vague argues that such crises follow a pattern that makes them both predictable and avoidable.
A Brief History of Doom examines a series of major crises over the past 200 years in the United States, Great Britain, Germany, France, Japan, and China—including the Great Depression and the economic meltdown of 2008. Vague demonstrates that the over-accumulation of private debt does a better job than any other variable of explaining and predicting financial crises. In a series of clear and gripping chapters, he shows that in each case the rapid growth of loans produced widespread overcapacity, which then led to the spread of bad loans and bank failures. This cycle, according to Vague, is the essence of financial crises and the script they invariably follow.

Patient Capital: The Challenges and Promises of Long-Term Investing
By Victoria Ivashina and Josh Lerner
Summary via publisher (Princeton University Press)
There has never been a greater need for long-term investments to tackle the world’s most difficult problems, such as climate change and decaying infrastructure. And it is increasingly unlikely that the public sector will be willing or able to fill this gap. If these critical needs are to be met, the major pools of long-term, patient capital—including pensions, sovereign wealth funds, university endowments, and wealthy individuals and families—will have to play a large role. In this accessible and authoritative account of long-term capital investment, two leading experts on the subject, Harvard Business School professors Victoria Ivashina and Josh Lerner, highlight the significant hurdles facing long-term investors and propose concrete ways to overcome these difficulties.

The Sex Factor: How Women Made the West Rich
By Victoria Bateman
Review via The Guardian
Victoria Bateman is currently best known for protesting naked against Brexit, but she has also used her body to take a stance at the annual conference of the Royal Economic Society (Bateman is a fellow and lecturer in economics at Cambridge University). She had a couple of garments on, but not the main ones, and she endeavoured, by the shock, to rid the field of its “sex problem”, “to punch feminism into the centre of economics”.
The discipline acts as if feminism had never happened; most of the time, it acts as if women had never happened. And this, according to Bateman, is more than bad manners: it leaves economics powerless to answer its own fundamental questions, which centre on the prosperity of some continents rather than others, the persistence of poverty, the highs and lows of free markets. Her hypothesis is easy to accept, almost too easy: economics is a social science, for all its unshakeable love affair with squiggly equations. Seeking to explain complex systems of human interaction with reference to only one half of any given population is like trying to split the atom with a rigid focus on protons, and the odd rider: “Sure, sure, we know neutrons exist of course, but they aren’t literate, so we can’t know that much”.

Bitcoin Billionaires: A True Story of Genius, Betrayal, and Redemption
By Ben Mezrich
Review via MSN.com
Ben Mezrich has enviable form penning excitable bestsellers with big-screen potential. Bringing Down the House, his fast-paced account of the MIT Blackjack Team who took on a Las Vegas casino, became high-grossing heist flick 21; Accidental Billionaires, a breakneck tour of the Harvard campus inception of Facebook, laid the groundwork for Oscar-winning Mark Zuckerberg biopic The Social Network. They, in these fast-moving times, are the sort of engrossing reads you’ll pick up idly in an airport, only to catch the blockbuster adaptation on the plane.
Cue Bitcoin Billionaires, a page-turner that rattles together — and tries to make some sense of — the mystifying world of cryptocurrency, fintech and overnight millionaires barely out of their board shorts, who “want this Bitcoin thing to overturn everything”.

Boom: Mad Money, Mega Dealers, and the Rise of Contemporary Art
By Michael Shnayerson
Review via NY Times
“Boom” is the title Michael Shnayerson, a contributing editor at Vanity Fair, has taken for his history of the postwar art market, which is to say, a story of untrammeled growth and undreamed-of excess. “Dealers tell us that the day of the $10 million painting is at hand,” the critic Robert Hughes wrote in 1984. “Never before have the visual arts been the subject — beneficiary or victim, depending on your view of the matter — of such extreme inflation and fetishization.” In the decades since, the $10 million painting no sooner arrived at hand than flew out of it, headed for higher, much higher. Now records, itchy even in their impossibility, wait impatiently to be smashed. “Rabbit,” a 1986 stainless steel sculpture of a child’s inflatable bunny by Jeff Koons, a Gagosian artist, sold for $91.1 million with fees at Christie’s on May 15, setting a new record for work by a living artist at auction. It seized the title from a David Hockney painting, which went for $90.3 million last year.

Entrenchment: Wealth, Power, and the Constitution of Democratic Societies
By Paul Starr
Summary via publisher (Yale University Press)
Much of our politics today, Paul Starr writes, is a struggle over entrenchment—efforts to bring about change in ways that opponents will find difficult to undo. That is why the stakes of contemporary politics are so high. In this wide-ranging book, Starr examines how changes at the foundations of society become hard to reverse—yet sometimes are overturned. Overcoming aristocratic power was the formative problem for eighteenth-century revolutions. Overcoming slavery was the central problem for early American democracy. Controlling the power of concentrated wealth has been an ongoing struggle in the world’s capitalist democracies. The battles continue today in the troubled democracies of our time, with the rise of both oligarchy and populist nationalism and the danger that illiberal forces will entrench themselves in power. Entrenchment raises fundamental questions about the origins of our institutions and urgent questions about the future.

Russia’s Crony Capitalism: The Path from Market Economy to Kleptocracy
By Anders Åslund
Summary via publisher (Yale University Press)
This insightful study explores how the economic system Vladimir Putin has developed in Russia works to consolidate control over the country. By appointing his close associates as heads of state enterprises and by giving control of the FSB and the judiciary to his friends from the KGB, he has enriched his business friends from Saint Petersburg with preferential government deals. Thus, Putin has created a super wealthy and loyal plutocracy that owes its existence to authoritarianism. Much of this wealth has been hidden in offshore havens in the United States and the United Kingdom, where companies with anonymous owners and black money transfers are allowed to thrive. Though beneficial to a select few, this system has left Russia’s economy in untenable stagnation, which Putin has tried to mask through military might.

One thought on “Book Bits | 25 May 2019

  1. Aaron

    Just got done reading a history of doom per your recommendation. I thought the debt situation was getting better. From the authors point of view we needed a deleveraging event such as austerity, but QE only had minor impact towards debt of our nation when compared to GDP. Good stuff, thank you for your blog, books and recomended books.

    Cheers,
    A recent purchase of three of your books,
    Aaron

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