Saturday, July 26, 2014

On book reports...............................

     In junior high school, I  hated writing "book reports."  Now, I enjoy reading them.  Especially useful ones.  Among the reasons I follow David Merkel's The Aleph Blog is that he regularly offers useful reviews on books about investing and the "market."  His latest review, on Panic, Prosperity, and Progress:  Five Centuries of History and the Markets, is typical.  Two excerpts:

What Could Have Made the Book Better
"Financial crises don’t appear out of nowhere.  Leaving aside war on your home soil, plague, famine, communism, etc., there is usually a boom that gives way to a bust.  In some of his chapters, he could have spent more time describing the boom that led to the bust.  This is important, because readers need to learn intuitively that the boom-bust cycle is normal. NORMAL!
"Ignore the economists who think they can control the economy.  They can’t do it, and this book helps to say that.  Economists are always behind the curve.  Politicians are even further behind the curve.  Regulators are still further behind the curve, and usually do the wrong thing during crises as a result."
On pages 421-422, he shows that he doesn’t get securitization, and blames the rating agencies, who were forced to rate novel debt for which they did not have a good model because the regulators outsourced credit risk measurement to them.

Learned something new today.  Full book review is here.  

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