Other People’s Money

By far the best book I have read on what’s wrong with our financial institutions.
A real rarity–a book about finance that is both iinstructive and fun to read. Kay is an extremely good writer, who uses simple analogies to underscore his points. The tailgating ultra-high-speed French driver becomes the example of risking a calamity to gain a small advantage. A graphic image which is far better than pages of discussion of risk analysis.I have read several books about the 2008 collapse. This is by far the best of the bunch, providing a clear road map to the problems of the financial industry which made its collapse inevitable. And which will provide another crisis unless the political class can force real change.The basic problem is that too many of the financial institutions have stopped providing a useful service to the society, and become gamblers using the public’s money to gamble. That I had realized. And I knew that if the gambles went sour, the Central Banks were ready to pour new money into the institution., so the hapless public covered the downside.;, But I had thought that the profits from the gambling would go to the shareholders. Not so. What I hadn’t understood is that most of the profits are paid over to the executives as citizen-infuriating salaries, and to the gamblers who had won their bets, as bonuses.Kay doesn’t offer what is, to me, a plausible solution. The key, as he says, is to separate the gamblers from public money and government bail-outs. Sounds a lot like Glass-Stegall, which got the job done for 75 years, but was finally nullified just in time to permit the gamblers to bring us the 2008 disaster; and couldn’t get past the bank lobbyists as Congress pretended to look for solutions. So they get Elizabeth Warren’s Consumer Protection Board. The Lord works in mysterious ways.

There is a lot to learn from this book
Really found this book insightful and thought-provoking. I’m probably a little too young and not well versed enough in finance to have understood everything, which is to say, at times it was a little over my head. However, for it being a finance book, it was rather engaging and I liked the writing style of the author. He seemed like an exceptionally smart and reasonable guy and I found the arguments he presented in the book to be very sensible. It helped that this book didn’t have an overt political sway, in fact, I found it difficult to figure out exactly where the author stood. So don’t be afraid that if you read this book you’re going to be necessarily politically persuaded in some way or another, as it’s not really focused on that. The author was also able to describe our financial system almost in a detached, very critical and observational type of way but, as well, he also had an insiders perspective. The gist is that our financial system is too complex and interdependent and this is the source of it’s underlying fragility. As well, we have a lot of misconceived regulation. Overall, I really appreciated what I learned from this book, definitely buy it if you are unsure. It’s very relevant.

Not sure how it all works? Read this and weep. Read it from cover-to-cover, sit down with your favourite drink and scream and scream at the sky. No matter how clever and shrewd you believe you are, you will need to pat yourself on the back and recognise that, in reality, you are a complete punter. Think the whole world has gone mad? Correct, a cosmic level of bonkers.A must read book.

A (not too) old man is talking about the good old times when business was led by virtue and trust and the good old director of a bank was in personal touch with his customers. But, alas poor Yorick, where are all the flowers gone? The author now starts a fury and angry attack against the finance industry of today. Which serves no more the “real business” (very good) but just deals with itself (very bad) and enriches the bosses of financialisation beyond any imagination (very, very bad). This is all true without doubt. The author, however, in his fist shaking rage forgets to give more information than an average reader could grasp out of an average newspaper. Instead, he insures every now and then to deliver more insight in coming chapters. But when the average reader makes hastily to the pages of promise he finds himself advised that further details were proved already in the paragraphs before.Above all the author stresses the title of his book “Other People’s Money” (a sentence coined by Adam Smith) far too much. The reproach (and, to be clear, the fact) that somebody waists the money which doesn’t belong to him and enriches himself in doing so is made (and will be made till the end of time) for politicians and even for the managers of the author’s so beloved real business (forgot Dieselgate?). Alright, all true – but where is the beef?P.S. I bought the book because of a recommendation in a footnote of “The End of Alchemy”, the indispensable book of by Mervyn King, the former Governor of the Bank of England. Perhaps this was a help between friends, it is but the only sentence which I can’t agree in King’s outstanding book.