In recent years, we've been rocked by a series of economic jolts, and all of them seemed to revolve around finance. And the most recent, the American mortgage meltdown, has sent shock waves around the world. Managed by the Markets offers an illuminating account of how finance has replaced manufacturing at the center of the American economy over the past three decades, explaining how the new finance-centered system works, how we got here, and what challenges lay ahead.
Since the early 1980s, Gerald F. Davis shows, finance and financial considerations have increasingly taken center stage, dramatically reshaping American society. Corporations now have an overriding focus on creating shareholder value, while their personnel practices no longer provide secure employment, economic mobility, health insurance, or retirement benefits. Instead, employees must become shareholding free-agents, left to their own fate. Banking has shifted from the traditional role of taking in deposits and making loans to the widespread use of "securitization," turning loans (such as mortgages or corporate debt) into bonds owned by institutional investors. The financial services industry is both more concentrated among large banks and mutual funds, yet more spread out among under-regulated specialists such as mortgage finance companies and hedge funds. And states increasingly act as "vendors" in a global marketplace of law, emulating firms such as Nike, hiring contractors to do much of the work of government.
As a result, individuals and households find their welfare tied to the stock market and the mortgage market as never before. And the turbulence of recent years starkly underscores the dangers of depending too much on financial markets. Written in the spirit of C. Wright Mills' penetrating The Power Elite and White Collar, this brilliant study provides an invaluable map of the finance-driven American society.
©2009 Gerald F. Davis; (P)2009 Audible, Inc.
This book came as a pleasant surprise. I initially thought (incorrectly) I might have to put up with a certain amount of emotive populist claptrap, in my search for good history and insights. This author, thankfully, is more balanced and responsible than that. The author takes a complex flow of history with all kind of financial players weaving through it, and calmly, thoughtfully assembles it all into very understandable sequences. I got so many insights on why banks have done what they've done, for better or worse: their business and regulatory environment over the decades is shown well and clearly. And of course, we get a fine review of the shadow-banks and other players and deals appearing on the scene too. This is my ONE desert island book (or book I would bequeath to younger people at this time) about "how USA got here and what's going on." As goes finance, so goes the structure of so much in our world, from the personal level to the biggest moves and movers out there. I feel I'm a better-informed citizen, a better planner in my life, and a better investor, for having read this. I have a much more ready grasp of the players and the story. It will be my pleasure to listen through this a second time.
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