Book Bits For Saturday: 7.9.2011

The Devil’s Derivatives: The Untold Story of the Slick Traders and Hapless Regulators Who Almost Blew Up Wall Street . . . and Are Ready to Do It Again
By Nicholas Dunbar
Summary via publisher, Harvard Business Press
“The Devil’s Derivatives” charts the untold story of modern financial innovation–how investment banks invented new financial products, how investors across the world were wooed into buying them, how regulators were seduced by the political rewards of easy credit, and how speculators made a killing from the near-meltdown of the financial system. Author Nicholas Dunbar demystifies the revolution that briefly gave finance the same intellectual respectability as theoretical physics. He explains how bankers created a secret trillion-dollar machine that delivered cheap mortgages to the masses and riches beyond dreams to the financial innovators. Fundamental to this saga is how “the people who hated to lose” were persuaded to accept risk by “the people who loved to win.” Why did people come to trust and respect arcane financial tools? Who were the bankers competing to assemble the basic components into increasingly intricate machines? How did this process achieve its own unstoppable momentum, ending in collapse, bailouts, and a public outcry against the stars of finance? Provocative and intriguing, “The Devil’s Derivatives” sheds much-needed light on the forces that fueled the most brutal economic downturn since the Great Depression.


Minding the Markets: An Emotional Finance View of Financial Instability
By David Tuckett
Review via The Guardian
In Minding the Markets Prof David Tuckett, from University College London, argues that contemporary economics, with its neat mathematical models and fully rational robot-like decision-makers, fatally under-estimates the importance of emotions. There is plenty of economic research – by George Akerlof and Robert Shiller, for example – on the psychology of market bubbles. But Tuckett’s insight, based on in-depth interviews with more than 50 investors, each managing more than $1bn, is that stocks, shares and derivatives are a special kind of asset, and decisions about whether to buy and sell them are particularly subject to stories and emotions.
Financial Statement Analysis: A Practitioner’s Guide (4th ed.)
By Martin S. Fridson and Fernando Alvarez
Summary via publisher, Wiley
In Financial Statement Analysis, Fourth Edition, leading investment authority Martin Fridson returns with Fernando Alvarez to provide the analytical framework you need to scrutinize financial statements, whether you’re evaluating a company’s stock price or determining valuations for a merger or acquisition. This fully revised and up-to-date Fourth Edition offers fresh information that will help you to evaluate financial statements in today’s volatile markets and uncertain economy, and allow you to get past the sometimes biased portrait of a company’s performance.
Sacred Economics: Money, Gift, and Society in the Age of Transition
By Charles Eisenstein
Summary via publisher, North Atlantic Books
Sacred Economics traces the history of money from ancient gift economies to modern capitalism, revealing how the money system has contributed to alienation, competition, and scarcity, destroyed community, and necessitated endless growth. Today, these trends have reached their extreme—but in the wake of their collapse, we may find great opportunity to transition to a more connected, ecological, and sustainable way of being. This book is about how the money system will have to change—and is already changing—to embody this transition. A broadly integrated synthesis of theory, policy, and practice, Sacred Economics explores avant-garde concepts of the New Economics, including negative-interest currencies, local currencies, resource-based economics, gift economies, and the restoration of the commons. Author Charles Eisenstein also considers the personal dimensions of this transition, speaking to those concerned with “right livelihood” and how to live according to their ideals in a world seemingly ruled by money. Tapping into a rich lineage of conventional and unconventional economic thought, Sacred Economics presents a vision that is original yet commonsense, radical yet gentle, and increasingly relevant as the crises of our civilization deepen.
Barbarians of Oil: How the World’s Oil Addiction Threatens Global Prosperity and Four Investments to Protect Your Wealth
By Sandy Franks and Sara Nunnally
Summary via publisher, Wiley
An engaging look at the global oil industry and how to navigate the price volatility and new policies associated with it. Oil is a constantly changing industry, and with the recent BP oil spill in the Gulf of Mexico, more changes are expected. From extra equipment, higher-cost insurance, and expensive technology to mandatory third-party inspections, costly delays, and shifting investments, analysts say the price tag of regulation will be stiff and not confined to the Gulf. The oil industry affects everyone, and the machinations of a few industry heads, the “Barbarians of Oil,” can drastically change the lives of investors and consumers. In Barbarians of Oil author Sandy Franks offers the tips needed to avoid future market dips and dives as well as safeguard your investments and profit in the future.
The Man of Numbers: Fibonacci’s Arithmetic Revolution
By By Keith Devlin
Review via The Wall Street Journal
Before the 13th century, European businessmen recorded figures in Roman numerals and computed with their fingers or a counting board. But these creaky accounting systems began to buckle under the growing complexity of regional and international finance. In 1202, Leonardo of Pisa—better known by his family name, Fibonacci—published the “Liber Abbaci,” or “Book of Calculation,” a 600-page tome detailing the rules of Hindu-Arabic arithmetic and algebra. Fibonacci’s volume was directed not to scholars but to merchants, the first work in the West to demonstrate the commercial utility of Eastern mathematics. The book was an instant success and propelled the Pisan maestro d’abbaco to fame. The “Liber Abbaci” inspired a flood of regionally produced (and lesser) primers on the subject. Arithmetic schools sprang up throughout Italy and would eventually count among their pupils da Vinci and Machiavelli. German merchants flocked to Venice during the 1300s to learn the new accounting practices. In “The Man of Numbers,” mathematician Keith Devlin makes the case that Fibonacci’s book spearheaded the decline and fall of the Roman numeral and transformed scientific, technological and commercial calculation in the West.

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