Book Bits For Saturday: 4.30.2011

The Most Important Thing: Uncommon Sense for the Thoughtful Investor
By Howard Marks
Summary via publisher, Columbia University Press
Howard Marks, the chairman and cofounder of Oaktree Capital Management, is renowned for his insightful assessments of market opportunity and risk. After four decades spent ascending to the top of the investment management profession, he is today sought out by the world’s leading value investors, and his client memos brim with insightful commentary and a time-tested, fundamental philosophy. Now for the first time, all readers can benefit from Marks’s wisdom, concentrated into a single volume that speaks to both the amateur and seasoned investor. Informed by a lifetime of experience and study, The Most Important Thing explains the keys to successful investment and the pitfalls that can destroy capital or ruin a career. Utilizing passages from his memos to illustrate his ideas, Marks teaches by example, detailing the development of an investment philosophy that fully acknowledges the complexities of investing and the perils of the financial world. Brilliantly applying insight to today’s volatile markets, Marks offers a volume that is part memoir, part creed, with a number of broad takeaways.

The Wizard of Lies: Bernie Madoff and the Death of Trust
By Diana Henriques
Review via NPR
The first journalist to interview Bernie Madoff after the money manager was sentenced to 150 years in prison says she was struck that Madoff hadn’t fundamentally changed. Even behind bars, says New York Times financial writer Diana Henriques, Madoff was a “fluent liar.” “The magic of his personality is how easy it is to believe him — almost how much you want to believe him,” she tells Fresh Air’s Terry Gross. “For example, he assured me in that first interview — and in emails subsequently that we exchanged — that he wasn’t going to talk to other writers. … Of course, it wasn’t true, he was talking to others. It was all a lie.”
Brave New World Economy: Global Finance Threatens Our Future
By Wilhelm Hankel and Robert Isaak
Summary via publisher, Wiley
For decades, the U.S. dollar has served as the world’s reserve currency. But after the global market meltdown and the resulting massive stimulus spending meant to keep the Great Recession from becoming an even Greater Depression, confidence in America’s ability to make good on its growing debt is at all-time lows. In Brave New World Economy: Global Finance Threatens Our Future, Wilhelm Hankel and Robert Isaak—two extremely controversial, yet highly respected experts on international economics and management—describe how “Obamanomics,” the Euro crisis, and shift of economic growth from the West to emerging economies, if handled properly, can lead to true economic stability and job creation.
Financial Globalization, Economic Growth, and the Crisis of 2007-09
By William R. Cline
Review via Foreign Affairs
Following within a decade of the Asian financial crisis, the recent global financial crisis has revived the debate over the merits of openness to foreign finance, especially for developing countries. Restrictions on international capital movements are back in fashion. In this useful overview, Cline reviews the extensive and scattered economic literature on the contribution of financial openness to economic growth, correcting the mistaken impression that the literature provides little support for it. The results of many studies are overwhelmingly one-sided in showing that financial openness encourages growth — it has boosted the GDPs of the emerging countries by 0.5 percent a year since 1990, Cline estimates, and it has boosted those of the rich countries by even more. The cumulative gains of opening up to foreign capital outweigh the losses attributable to occasional financial crises (as opposed to global recessions, which hurt countries largely by reducing trade).
A Great Leap Forward: 1930s Depression and U.S. Economic Growth
By Alexander J. Field
Summary via publisher, Yale University Press
This bold re-examination of the history of U.S. economic growth is built around a novel claim, that productive capacity grew dramatically across the Depression years (1929-1941) and that this advance provided the foundation for the economic and military success of the United States during the Second World War as well as for the golden age (1948-1973) that followed. Alexander J. Field takes a fresh look at growth data and concludes that, behind a backdrop of double-digit unemployment, the 1930s actually experienced very high rates of technological and organizational innovation, fueled by the maturing of a privately funded research and development system and the government-funded build-out of the country’s surface road infrastructure. This significant new volume in the Yale Series in Economic and Financial History invites new discussion of the causes and consequences of productivity growth over the last century and a half and on our current prospects.
Fatal Risk: A Cautionary Tale of AIG’s Corporate Suicide
By Roddy Boyd
Review via The Economist
The collapse of first Bear Stearns and then Lehman Brothers in 2008 were the emblematic events that triggered the financial crisis. But those companies were involved in investment banking, an inherently risky business. The demise of AIG, an insurance company that was for a long time judged to be an unimpeachable credit, was even more astonishing. Indeed, as Roddy Boyd demonstrates in his well-written study of AIG’s fall, it was the very solidity of the company’s credit rating that led it astray. Painstakingly built over the course of 40 years by an army veteran, Hank Greenberg, AIG was the ideal counterparty for Wall Street.