Book Bits: 5 February 2022

Price Wars: How the Commodities Markets Made Our Chaotic World
Rupert Russell
Review via Publishers Weekly
Documentary filmmaker and sociologist Russell debuts with a harrowing look at the disastrous consequences of financial speculation. Contending that recent political and social turmoil in Iraq, Ukraine, Venezuela, and other countries has been triggered by irrational price shocks that don’t correspond to actual issues of supply and demand, Russell details how small market movements are amplified and manipulated by hedge fund managers and commodities traders seeking to deliver consistent profits regardless of real-world conditions. Among a plethora of disturbing case studies, Russell describes how oil wealth generated by market speculation fueled corruption and then caused ruinous hyperinflation in Venezuela; explains how artificially low coffee prices, climate change, and agricultural debt led to a surge in migration from Guatemala toward the U.S.; notes that the terrorist organization al-Shabaab drove down cattle prices in Somalia during a 2010–2011 drought in order to compel desperate farmers to join their ranks; and contends that Western governments suspending “the rules of the game” to prop up their economies during the Covid-19 pandemic only underscores how much arbitrary control markets and prices have over the global economy.

The Revolution That Wasn’t: GameStop, Reddit, and the Fleecing of Small Investors
Spencer Jakab
Review via LA Times
Remember last year, when bros in their bedrooms ganged up on the Robinhood app, pumped meme stocks like GameStop to absurd heights, got crazy rich and beat Wall Street at its own game?
If that’s the way you remember it, you’re wrong — although you can be forgiven, given how much of the media played the story like David v. Goliath, the little guy wielding a social media slingshot to stick it to the man.
Spencer Jakab sets the record straight in his new book, “The Revolution that Wasn’t: GameStop, Reddit, and the Fleecing of Small Investors.” Some little guys did get rich. Most lost their money and many saw their entire savings cleared out, meager as they might have been. But guess who profited most from the meme stock craze? That’s right — Wall Street.

Sickening: How Big Pharma Broke American Health Care and How We Can Repair It
John Abramson
Review via Kirkus Reviews
Abramson makes a powerful case that, over the past 40 years, profiteering drug companies have played an outsized role in two crises: the soaring costs of health care and America’s plunging “healthy life expectancy,” ranked 68th in the world in 2019. Linking the problem to a corporate shift to chasing profitability untethered from social responsibility, the author shows how corporations have hijacked sources of information doctors once could trust, such as medical journals, educational conferences, and lectures. The corruption began in the 1990s, when drug companies took control of clinical trials from academic medical centers; 6 out of 7 trials are now funded commercially by sponsors who have no obligation to show their data to medical journals.

The Power Law: Venture Capital and the Making of the New Future
Sebastian Mallaby
Review via Business Insider
In his new book, The Power Law: Venture Capital and the Making of the New Future, respected journalist Sebastian Mallaby has paired a deeply researched history of the venture capital industry with a full-throated polemic in defense of the social value of a venture market that doubled in size in 2021, as over $600 billion dollars in funding pumped into startups around the world. .
Coming just weeks after the conviction of Theranos founder Elizabeth Holmes reinforced the public’s worst preconceptions of Silicon Valley arrogance, greed, and deceit, the book will undoubtedly spark vigorous debate. Mallaby sheds important light on the structures and processes behind what has become a powerful (and cloistered) force in American life.

The Money Revolution: How to Finance the Next American Century
Richard Duncan
Summary via publisher (Wiley)
In The Money Revolution: How to Finance the Next American Century, economist and bestselling author Richard Duncan lays out a farsighted strategy to maximize the United States unmatched financial and technological potential. The author shows that the United States can and should invest in the industries and technologies of the future on an unprecedented scale in order to ignite a new technological revolution that would cement the country’s geopolitical preeminence, greatly enhance human wellbeing, and create unimaginable wealth.

Dignity in a Digital Age: Making Tech Work for All of Us
Ro Khanna
Interview with author via the Intercept
In his new book, “Dignity in a Digital Age,” Rep. Ro Khanna, D-Calif., tackles the question of how the prosperity generated by technology can be more broadly shared. In the foreword, Indian economist Amartya Sen writes that “just as people can move to technology, technology can move to people. People need not be compelled to move from one place to another to reap the benefits offered by technological progress.” Khanna, who represents Silicon Valley, joins Ryan Grim to discuss the book and more.

Nonlinear Valuation and Non-Gaussian Risks in Finance
Dilip B. Madan and Wim Schoutens
Summary via publisher (Campbridge U. Press)
What happens to risk as the economic horizon goes to zero and risk is seen as an exposure to a change in state that may occur instantaneously at any time? All activities that have been undertaken statically at a fixed finite horizon can now be reconsidered dynamically at a zero time horizon, with arrival rates at the core of the modeling. This book, aimed at practitioners and researchers in financial risk, delivers the theoretical framework and various applications of the newly established dynamic conic finance theory. The result is a nonlinear non-Gaussian valuation framework for risk management in finance. Risk-free assets disappear and low risk portfolios must pay for their risk reduction with negative expected returns. Hedges may be constructed to enhance value by exploiting risk interactions. Dynamic trading mechanisms are synthesized by machine learning algorithms. Optimal exposures are designed for option positioning simultaneously across all strikes and maturities.

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