Fixing Global Finance

October 31, 2009 | By admin In Financial News |

Fixing Global Finance

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5 Comments so far

  1. B. Davide on October 31st, 2009

    Martin Wolf made a really excellent book. It is well written and quick to read.
    Rating: 4 / 5

  2. P. Legrain on October 31st, 2009

    Martin Wolf’s latest book is like his columns in the FT: small, punchy and rigorous. His perceptive insight and clear analysis clarify why the imbalances in the global economy are unsustainable, how they have helped sow the seeds for the current financial crisis, and how the global economic and financial system should be reformed. It’s a fantastic book. The only pity is that it was written before the current financial crisis took hold, but it is a must-read all the same.
    Rating: 5 / 5

  3. Ulrik Jungersen Walther on October 31st, 2009

    I looked forward to this book with anticipation and fantastic expectations. But it disappointed slightly. I probably expected too much.

    I hold Martin Wolf in fantastic esteem and believe him to be one of the most insightful and clear thinking economic commentators today. I had hoped some of that would transpire into some real concrete solutions as to what can really be done to “fix global finance.” But it didn’t; hence my disappointment.

    On the positive side, the book does give an extensive, sober and clear analysis into the imbalances that made the financial and economic crisis of 2008 / 2009. Wolf’s thesis is that the crisis has been made and exacerbated by an enormous “savings glut” in regions such as Asia (China, Japan, Korea etc) combined with excess spending (dis-savings) in the Anglo Saxon world (primarily United Kingdom and the United States). The “savings glut” has become the result of deliberate mercantilist economic policies adopted by most large emerging market countries following the Tequila Crisis in 1995 and the Asian / Russian Crises of 1997/8.

    The solution? Get them to spend more on goods with high import content, so that the US and UK can export their way back to prosperity and improved solvency. I have no problem with this concept, but I dread successful execution is going to extend well beyond the current crisis if not beyond the next.

    If you are not an insider to the world of finance and economics, this book will provide you with the foundations for a balanced and well considered view (though I would recommend a brush-up on your current account and capital account definitions).

    If you belong to the “it’s all the bankers’ fault because they received huge bonuses and wouldn’t extend me a mortgage that I couldn’t repay anyway” brigade and are looking for something more sensationalist, then this book will only serve to frustrate. It is very macro economic and does not really deal with the micro side of the crisis.

    Expectations theory is a cornerstone of global finance. If you do not expect an answer to the implicit question in the book’s title, by all means give it a go and I am sure you will be positively surprised. If you want an answer to how we do fix global finance, I dread you are going to have to wait for quite some time.

    Rating: 4 / 5

  4. David Francis Mccarthy on October 31st, 2009

    much of the material is out dated – even at time of going to print. An economists book for an economist, lacks deep insight and ruminates through earlier scholarly literature like a mix and match. The economic analysis of the imbalances fails to know their trans economical root causes; namely the ‘culturally determined’ marginal propensity to consume of the American subject not to mention other related matters. As regards Wolf’s recommendations for progress going forward I will not comment on out of charity. For one searching for the historical roots of the present ‘crises’ Soros and Minsky do a better job. But I did read it too the end and it covers a lot of the contemporary literature so that might be helpful to some. I have all of Wolfs publications and this one is not up to his usual standards.
    Rating: 2 / 5

  5. Feyd on October 31st, 2009

    Only Martin Wolf could have written this book.

    Imagine a team of scholars working to ensure all the vital areas are covered with rigorous accuracy & precision; a top journalist to render their findings in clearly accessible writing; chuck in a leading currency speculator and a few SWF managers to keep it real and finally a wizard to morph the whole team into a single person so the writing is really coherent and unified. This book really is that excellent.

    But the book isn’t about the current crises. There’s some reference to the beginnings of the sub prime in 2007 but the work doesn’t really get more up to date than that.

    Also the book doesn’t reflect Wolfs current views. He writes about government intervention doing more harm than excellent – in contrast to his recent FT columns where he advocates much more robust intervention than we’ve seen to date – ’shock and awe’ as he calls it.

    Still the fact that the book was largely written from the neo – liberal perspective doesn’t detract from its value at all. Unlike nearly everyone else on both sides of the free market / managed economy divide, Wolf doesn’t let his point of view get in the way of a clear and objective description of the world as it really is.

    Martin describes many of the issues with global finance that a radical might have picked out, at least one writing back in 2007. He’s not really prescriptive with his solutions, I reckon he felt he just needed to show the world the huge picture with sufficient clarity, and then actors would themselves see what needs to be done. Which from a free market perspective was for governments in the developing world to encourage stability and set up markets that encourage the types of investment that are least vulnerable to backfiring on the host country due to capital flight when financiers get panicky. And for financiers from Asia , who now control much more wealth than their western counterparts, to stop flooding the US with Capital (as they were back in 07) and instead start investing in their own region not only will benefit their people but should have a better chance of securing them high long term returns.

    Anyhow that sort of thinking has been superseded by events, and is only a small part of the book. Whats not redundant is the detailed, lucid description of global finance, supported with generous references to the best available sources for those who want an even deeper understanding of particular features.

    Despite the quality of writing , this book may be demanding for the general reader due to the shear density of information it contains. Unlike other recent books it doesn’t try to clarify in the context of a theory that effectively tells the reader how to reckon – at least if you ignore the light touch free market leanings. Still if you want to learn about global finance as it really was up until 2008, this is the book you’re looking for.
    Rating: 5 / 5

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