Book Bits | 7 February 2015

Climate Shock: The Economic Consequences of a Hotter Planet
By Gernot Wagner & Martin L. Weitzman
Summary via publisher (Princeton University Press)
If you had a 10 percent chance of having a fatal car accident, you’d take necessary precautions. If your finances had a 10 percent chance of suffering a severe loss, you’d reevaluate your assets. So if we know the world is warming and there’s a 10 percent chance this might eventually lead to a catastrophe beyond anything we could imagine, why aren’t we doing more about climate change right now? We insure our lives against an uncertain future–why not our planet?

Inside the FDIC: Thirty Years of Bank Failures, Bailouts, and Regulatory Battles
By John F. Bovenzi
Summary via publisher (Wiley)
Inside the FDIC tells the real stories behind bank failures and financial crises to provide a direct account of the Federal Deposit Insurance Corporation and other bank regulators. Author John Bovenzi served in senior level positions within the FDIC for over twenty years, including a decade as the Deputy to the Chairman and Chief Operating Officer. This book describes what he witnessed as the person in charge of day-to-day operations, as a nearly invisible agency grew to become a major, highly independent force impacting US financial markets.

Steering Clear: How to Avoid a Debt Crisis and Secure Our Economic Future
By Peter G. Peterson
Summary via Peterson Foundation
Addressing our nation’s long-term fiscal challenges is essential to building an economic future that is dynamic, innovative, competitive, compassionate and full of opportunity for the next generation. These and other ideas are laid out in Foundation Chairman Pete Peterson’s latest book, Steer Clear: How To Avoid A Debt Crisis And Secure Our Economic Future. Pete discusses a range of non-partisan solutions and recommendations to steer the nation towards fiscal health and economic strength.

Market Madness: A Century of Oil Panics, Crises, and Crashes
By Blake C. Clayton
Summary via publisher (Oxford University Press)
The culmination of a multi-year study, he shows how generational fears about an imminent, irreversible shortage of oil punctuate the history of oil since its earliest days. He explores the conditions in which oil supply fears arise, gain popularity, and eventually wane, and shows how important such stories can be in affecting financial markets. He links these episodes to the behavioral concept of irrational exuberance and new era economic thinking, first popularized by Nobel Laureate Yale economist Robert Shiller, to show how unfounded pessimism affects the market for oil and other exhaustible resources. Acknowledging the significant geological and structural changes the oil market has undergone over the last century, the book does not dismiss today’s shortage fears out of hand, but asks what they reveal about how commodity markets function and what that means for investors and public officials.

God’s Bankers: A History of Money and Power at the Vatican
By Gerald Posner
Review via The Huffington Post
Gerald Posner’s book God’s Bankers: A History of Money and Power at the Vatican chronicles the secret side of the Vatican Bank, the Catholic Church’s completely independent financial institution. Part of that history is how the bank became a haven for the loot of mobsters, mafia men and money launderers, which Posner explained to HuffPost Live’s Caroline Modarressy-Tehrani in a Tuesday interview.

The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower
By Michael Pillsbury
Interview with author via Newsmax
A fluent Mandarin speaker with a national security background, Pillsbury contends that China doesn’t necessarily feel like it would need to slug it out militarily with the United States to emerge victorious on the global stage. The Chinese view is that Americans will undermine themselves, he writes.
But war is still possible, and the “unanticipated” rise of a new breed of anti-American hawks in Chinese political, military and academic circles doesn’t help matters, said Pillsbury.

The Powerhouse: Inside the Invention of a Battery to Save the World
By Steve LeVine
Review via Scientific American
Why didn’t electric cars win the race for vehicular dominance at the beginning of the 20th century? After all, they were cleaner and easier to use than cars burning gasoline. The answer, in a word, is batteries. Now, in the early years of the 21st century, the electric car is making a comeback of sorts, but the challenge remains the same—how to get more juice out of battery chemistry. Journalist LeVine examines the race to develop a better battery at Argonne National Laboratory and provides a history of battery design in recent decades. With the pace, if not quite the payoff, of a thriller, he also reveals how the very human foibles of scientists and entrepreneurs, as well as fundamental physics and chemistry, stand in the way of such efforts, which, if successful, could result in a new global industry and attendant jobs.

Dinosaur Derivatives and Other Trades
By Jeremy Josse
Summary via publisher, Wiley
Dinosaur Derivatives and Other Trades is an entertaining and compelling tour de force highlighting the paradoxes inherent to the modern financial system. Presented as a series of striking case studies, this book explores certain enigmatic or philosophical puzzles in the finance industry; some of these puzzles may seem slightly absurd at first glance, but all are very relevant to the way finance is conducted in the real world. Each story highlights specific hypocrisies or moral dilemmas that lie at the heart of the system, guiding readers through the challenges of finance by way of innovative and memorable paradigms.

Quantitative Technical Analysis: An integrated approach to trading system development and trading management
By Howard Bandy
Summary via book’s web site
The book discusses trading system development and trading management. The perspective of the book is that the goal of the developer of a trading system and of the trader who uses it is to have confidence that the signals issued by the system precede trades that provide rewards adequate to compensate for the risk. The key word is confidence.
The primary limitation is risk…. A technique that I have developed, which I call “dynamic position sizing,” uses an empirical Bayesian technique to determine the maximum safe position size, called “safe-f,” based on your personal risk tolerance in combination with recent trades. Position size is increased when the system is performing well.
Position size is reduced when system performance deteriorates, eventually taking the system offline before an equity-destroying system failure. Use of machine learning techniques, applied to trading systems, is introduced. Examples of classification and estimation are presented, using the Python language and associated application libraries.

One thought on “Book Bits | 7 February 2015

  1. Barkley

    You ask: “why aren’t we doing more about climate change right now?” Because Americans are “exceptional”, exceptionally stupid. A handful of corporate liars tell us we can dump as much trash into the ocean and the atmosphere but there will be NO consequences. And Americans believe it. God should have taken another day to create man. On the eighth day he should added logic.

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