Wall Street: How It Works and for Whom

Rating:
Summary: Illuminating
Review: Critics of America's financial system (capitalism) have pointed to economic deficiencies such as recessions, depressions, unemployment (and underemployment) and so forth as cracks in the system, and with a lot of these cracks popping up recently I've become more interested in the financial system and what's wrong with it. Doug Henwood's book "Wall Street" is very helpful in that respect. We also see a picture of economic history that for some reason we don't see in the news much: over the past thirty years, hours worked have increased, productivity has increased enormously, wealth for the rich has increased enormously but household debt has exploded as hourly wages (inflation-adjusted) have fallen. This is a very interesting trend which I didn't even know about until I read Henwood's book. I guess I'd heard people mention it in passing, but until he lays out the data, where it came from (BLS, Federal Reserve, NBER etc.), puts it on charts etc. it doesn't really hit you as being real as opposed to rhetoric.

Economic books can be dry reading, thus Henwood's wit helps make the reading more enjoyable. Henwood's sympathies also seem to lay with working class people over the rich who the financial markets usually serve, which makes reading easier as well as I don't have to read every passage critically wondering if he is trying to BS me into believing something that's against my interest to believe. This book got me interested in Henwood's other ventures - his newsletter, magazine, radio show, web site, mailing list etc. and they are all interesting as well. I hope every American reads this so they can understand better how this economic system works - after all, the fact that you spend most of your time in life working in order to get money means that *understanding* how money works is one of the more important things in life, right?

Rating:
Summary: Needs an Editor
Review: First a word about the publishing house: Verso Publishing is probably the finest publishing house in the world. When in a bind simply pick up any one of their titles and one cannot go wrong. It's imperative to read at least a few of their books at least once.

Henwood's "Wall Street" blows the lid off high finance like few other works. It's the definitive critical analysis (along with some of William Greider's books) of the high circles of wealthy investors.

Throughout "Wall Street" it rips apart the Federal Reserve Board and exposes its gritty innards. Henwood demonstrates that the Fed is an undemocratic institution that's obsessed with any hints of labor militancy, its biggest fear being wage inflation.

The Monetary School is also dissected by Henwood, being exposed as the fraudulent theory it truly is (or clever ruling class idealogy). He points out that the Monetarist's ostensibly blamed the federal government for the Great Depression. Of course this has the fascinating effect of letting capitalism completely off the hook. The concepts of over productivity and income polarization, which were the defining characteristics of the 1920s, are rarely to be found in their school of thought.

Constant pressure by Wall Street for ever higher stock prices is what spurred most of the downsizing during the last decade according to Henwood. He smartly points out that this pressure for quick profit growth can often squelch research and development and investment projects which would benefit society. Because shareholders may very well deem these projects irrelevant to short-term profit growth.

Underlying "Wall Street" throughout Henwood continually pays homage to Karl Marx and some of his incredibly accurate predictions. He also demolishes old shibboleths such as the well worn canard that higher wages automatically translate into reduced employment opportunities, or that rising stock prices always mean a rosy economic picture for the general population. "Wall Street" proves that rising stock prices can often coincide with a poor economy for the masses.

Henwood documents the fraudulent work done by professional money managers who'd be better off throwing darts at a dart board than using their investment "skills" when making investment decisions for clients.

Some of the most important and informative sections deal with the rising consumer debt of the average American citizen. Being leveraged to the hilt, the family unit has basically been turned into a player in a giant Ponzi scheme. Capitalism in the United States desperately relies on credit-financed consumption to stay afloat.

Most books dealing with such an overarching topic give a paltry and dissatisfying "What is to be Done" final chapter. This isn't the case for "Wall Street." Henwood offers up many concrete and plausible solutions. Finally at one point asserting that an authentic financial transformation must be made along with an attack on capitalist social power in general.

Rating:
Summary: The Truth
Review: First a word about the publishing house: Verso Publishing is probably the finest publishing house in the world. When in a bind simply pick up any one of their titles and one cannot go wrong. It's imperative to read at least a few of their books at least once.

Henwood's "Wall Street" blows the lid off high finance like few other works. It's the definitive critical analysis (along with some of William Greider's books) of the high circles of wealthy investors.

Throughout "Wall Street" it rips apart the Federal Reserve Board and exposes its gritty innards. Henwood demonstrates that the Fed is an undemocratic institution that's obsessed with any hints of labor militancy, its biggest fear being wage inflation.

The Monetary School is also dissected by Henwood, being exposed as the fraudulent theory it truly is (or clever ruling class idealogy). He points out that the Monetarist's ostensibly blamed the federal government for the Great Depression. Of course this has the fascinating effect of letting capitalism completely off the hook. The concepts of over productivity and income polarization, which were the defining characteristics of the 1920s, are rarely to be found in their school of thought.

Constant pressure by Wall Street for ever higher stock prices is what spurred most of the downsizing during the last decade according to Henwood. He smartly points out that this pressure for quick profit growth can often squelch research and development and investment projects which would benefit society. Because shareholders may very well deem these projects irrelevant to short-term profit growth.

Underlying "Wall Street" throughout Henwood continually pays homage to Karl Marx and some of his incredibly accurate predictions. He also demolishes old shibboleths such as the well worn canard that higher wages automatically translate into reduced employment opportunities, or that rising stock prices always mean a rosy economic picture for the general population. "Wall Street" proves that rising stock prices can often coincide with a poor economy for the masses.

Henwood documents the fraudulent work done by professional money managers who'd be better off throwing darts at a dart board than using their investment "skills" when making investment decisions for clients.

Some of the most important and informative sections deal with the rising consumer debt of the average American citizen. Being leveraged to the hilt, the family unit has basically been turned into a player in a giant Ponzi scheme. Capitalism in the United States desperately relies on credit-financed consumption to stay afloat.

Most books dealing with such an overarching topic give a paltry and dissatisfying "What is to be Done" final chapter. This isn't the case for "Wall Street." Henwood offers up many concrete and plausible solutions. Finally at one point asserting that an authentic financial transformation must be made along with an attack on capitalist social power in general.

Rating:
Summary: An informed view of Wall Street from a leftist perspective
Review: I have worked on Wall Street and I have to say this gives a pretty decent macroeconomic view of Wall Street. He explains stocks, bonds, derivatives, currencies, the Federal Reserve, Bretton Woods, the (in)efficiency of markets and many other topics. He then interprets what these things mean from a leftist perspective. The financial world is heavily right wing and accuses the left wing of not understanding how economics work and thus why the right wing is right about economics. This book will demystify acronyms like LIBOR, GDP and CAPM, and explain to you in Wall Street terminology how the rich are robbing the working class in this country (and the world) blind. Henwood's book, like Marx's Capital, is at heart an economic treatise with political ideas sandwiched in between the economic data and analysis. I said at the beginning I have worked on Wall Street and that is the truth - once you see the machine up close, or even become a cog in the machine, you realize how right people like Mr. Henwood really are.

Rating:
Summary: A biased but alternative view
Review: It's easy to forget that the world of investing is not always the benevolent opportunity and smooth-running system that the personal finance magazines and a never-ending bull market can make it appear to be. This book does an admirable job of not only reminding that there's a ruthless side to Wall Street, but also elegantly explaining some pretty sophisticated financial concepts.

Rating:
Summary: Needs an Editor
Review: Journalist Doug Henwood has produced an interesting book on U.S. financial markets. Written from a left-wing point of view, Henwood contends that these markets do not raise capital for new investments or improve corporate governance. Instead, he argues that their primary function is to enable manic corporate restructurings that accomplish little besides shifting additional wealth to rentiers who already have plenty of it. Henwood relies mainly on the research of others.

The good news about "Wall Street" is that Henwood is witty and iconoclastic. The bad news is that having these traits doesn't mean that he can put together a good book. His bloated and repetitive text mixes statistics, polemics, anecdotes, biz school research, and potted discussions of Keynes, Marx and Minsky (and Freud!). The mish-mash of data definitely informs and entertains the reader (hence my rating of 4 stars) but never systematically establishes Henwood's core thesis about the parasitism of Wall Street. The book is worth reading but mainly for readers with a background in finance or economics who can separate the wheat from the chaff.

Rating:
Summary: Excellent though biased left-wing critique
Review: This is a cut above the usual leftist whining about the horrors of capitalism. Henwood at least understands American high finance and has many pithy things to say about them, some of them all too true. He is quite right in sensing that all is not well with Wall Street and the stock market. Where he falls short is in his theoretical grasp of the situation. Here his left-wing bias, which gives him such a sharp eye when it comes to seeing institutional problems with Wall Street, leads him astray in bringing perspective to his institutional insights. Like the academic economists he excoriates, he does not fully understand how credit excess has completely distorted financial markets and made them much less efficient than they otherwise would have been. To be sure, he is right to say that markets are not 100% efficient. Markets merely give indications of whether past market decisions have been well informed or not.

I cannot help mentioning one troublesome little point about Henwood's analysis: while Henwood is correct to insist that Wall Street and corporate capitalism in general do not allocate capital as efficiently as an omniscient critic, with the benefit of hindsight, would, this does not mean that capital could be allocated more efficiently if we adopted another system or simply abolished the stock market altogether. The problem is, what is the alternative? To date, no one has yet demonstrated that there is a workable alternative that allocates capital better than capitalism.

Rating:
Summary: A must-read book on finance!
Review: Toward the end of the second Big Bull market of the 20th century U.S. (the first was in the 1920s), it's refreshing to read a book whose author doesn't fall for the hype. Henwood's critical analysis is extremely illuminating even to those who disagree with his political perspective (which is unfashionable left-of-center). His prose is as clear as can be. His focus is all-important: what is the impact of Wall Street's prosperity on the rest of us?

Rating:
Summary: An exceptional critical guide to the murky world of finance!
Review: Wall Street is a well conceived and much needed critical, and accessible, primer on international finance and economics that is worth buying just for the fascinating charts, graphs, and statistics within. While floating between the roles of journalist, scholar, and critical critic Henwood has a real skill at clearing away the mud surrounding institutions that often leave outsiders dumbfounded to understand "how they work and for whom."

Though the title of the book is "Wall Street," its focus is really the much broader world of finance, wealth, and power. Stocks, bonds, options, currency, swaps, The Fed, FX exchanges, S&L and derivative scandals, institutional investors, consumer credit, debtors and creditors, gold, leverage, financial theory, monetarism, Keynes, Marx, the relation between shareholders and managers, stock markets and workers, financial markets and governments, the distribution of wealth, and what is to be done are all incorporated into this thorough, but unintimidating, book.

Understanding how financial institutions work is the preoccupation of much sophisticated economic analysis, and Henwood does an admirable job at laying out the major lay and academic theories, their implications and faults. But what sets this book apart is the attempt to move outside the narrowness of how and, sometimes, why traders trade and buyers sell to the effects their actions, and the institutions in which they take place, have upon others and the power relations which are responsible for their profits and losses.

Henwood combines witticism and lucidity to make for a highly informative book, and a delightful read. It is certain that any reader of "Wall Street" will leave with a multitude of general information, new ideas, and insights about finance, political economy, and the individual's relation with them