Customer Reviews

Wall Street

5 star:		(11)
4 star:		(2)
3 star:		(3)
2 star:		(1)
1 star:		(1)

 

 

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.

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.

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?

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.

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?

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.

Wall Street is a moderately informative, highly opinionated piece of writing. It's a refreshing book to read because it takes as its premise (and its tone) that the financial industry is morally abhorrent and parasitic. In places the author goes even further and takes a few swipes at capitalism in general. This sets it apart from most other books in the genre. But frankly it goes to far. The book is too one-sided in its presentation to be useful as a learning tool, and reads much more like an op-ed piece than reporting

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.

The book reviewed many of the major workings and problems with Wall Street and how they came about. The author exposed many faults in the capitalistic system of "fund sucking", but did so in a very bias way. He attacked economic theorists in a way that lost track of how they related to the topic: Wall Street. He did not differentiate between his own factual research, and that of his biased opinion. This writing truly shows he is no author, but still a journalist.

The frantic shudders of the global stock markets over the past few weeks have no doubt sparked some anxious moments for millions of Americans who have been seduced by the lupine legions of brokers and a giddy media into offering up a hefty share of their earnings into 401-K plans and mutual funds. If only these investors had read Doug Henwood's Wall Street they might have realized from the outset that a perpetual sense of hopeless anxiety is an axiomatic part of the Faustian bargain they struck when put their cash into the hands of their "investment counsellors".

In Wall Street, Henwood takes readers inside the one place on Earth where the population most resembles that in the inner circles of Dante's Inferno. Along the way Henwood explodes three of the major myths of the market:

1. That the stock market is a primary way corporations raise capital; 2. That stocks prices have a direct relation to the value of a corporation (look at Amazon.com, for an example close at hand) 3. That the Dow Jones average provides any real indication as to the health of the American economy.

Henwood has written a cautionary tale, an instructive counter to the go-go treacle we are fed daily by the financial press. His prose style is a pleasure to read: clear, biting with irony, and neatly balancing outrage with humor.

Doug Henwood's Wall Street also stands as a vital political work, a perfect hedge fund against the last great project of neoliberalism: the privatization of social security.