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Cowardly Capitalism

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Cowardly Capitalism

The Myth of the Global Financial Casino

Wiley,

15 min read
10 take-aways
Audio & text

What's inside?

Is risk management dragging down the world’s economy?

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Editorial Rating

7

Qualities

  • Controversial
  • Eye Opening
  • Engaging

Recommendation

Let’s start out this review by stating up front that we disagree with Daniel Ben-Ami’s assertion that a preoccupation with risk measurement and management is a detriment to the global economy. With that out of the way, we can say that Ben-Ami presents a unique analysis of the modern global economy that is not at all without merit. His contention that lagging growth is a greater peril to the world’s economy than financial instability is reasonable and backed up by ample evidence and illustration. And his position that increased regulation could be doing more harm than good will be embraced by all free traders. On the basis of these discussions alone, getabstract recommends this book to anyone thinking seriously about international financial systems. But this book is perhaps most useful as a starting point for debate, which it will certainly generate in the mind of any informed reader. While you might quibble with Ben-Ami’s conclusions - as we do with his assertion that the threat of the 1990s financial crises was overblown - you will not be bored.

Summary

The Growing Fear of Finance

The notion of casino capitalism suggests a market out of control. It suggests that markets move randomly - like the roll of a pair of dice or the card that turns up in a card game - and are out of human control.

However, this vision of the global financial casino is incorrect. Today’s financial markets are characterized by a fear of risk, not by investors putting money into the market without any concern for danger. As it grew over the last decade, this attitude of risk aversion reshaped the financial market, resulting in a strong fear of financial instability and a demand for increased restraint. The critics and the financial markets are part of this culture of restraint.

Under the circumstances, the world economy’s big problem is not finance but the climate of risk aversion that hangs over the market. Rather than risk itself, the fear of risk taking is the big danger. In turn, this has led to a drive to quantify risk precisely, using probabilities to assign levels of risk to each outcome - an approach that involves applying the modern techniques of risk management. Advanced statistical techniques are used to quantify all types of...

About the Author

Daniel Ben-Ami  has worked as a financial journalist in London for 15 years. He has written for several national publications in the United Kingdom, including the Financial Times, Guardian, Independent, Sunday Times and Prospect magazine and numerous specialty journals. He has additionally written on the Middle East for the Economist Intelligence Unit and contributed to Cultural Difference, Media Memories on media images in Japan. He was editor of Investment Adviser, specialist weekly newspaper on mutual funds for four years, and is now a senior editor for Morningstar in London.

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