In Defense of Free Capital Markets: The Case Against a New International Financial Architecture [Hardcover]

David F DeRosa Ph.D. (Author), David F. DeRosa (Author)

Book Description

Publication Date: January 2001

Although significant financial crises world-wide -- in Japan, Mexico, Thailand, Indonesia, Russia, and Brazil -- have affirmed that the free market system is imperfect, no successful alternative to free capital markets has ever been devised. Nevertheless, many theorists are proposing that industrial nations together create a new framework for regulation -- a new international financial architecture -- using measures such as target zones for foreign exchange rates, currency boards, and controls on speculative trading of securities.

David DeRosa presents an emphatically opposing view -- that less, not more regulation is vitally needed. DeRosa demonstrates that public policies have often been dead wrong in concept and application; that so-called controls generate indirect and unintended harmful consequences; and that aggressive intervention is no panacea, even in cases such as the collapse of Long Term Capital Management, the former high-flying hedge fund.

DeRosa presents a rousing argument for putting far greater trust in the markets themselves. He exposes the risks, market distortions, and huge, hidden costs that can result from governmental bailouts and proposed reforms. David DeRosa makes an important contribution to a debate whose outcome will determine the stability and prosperity achievable in an interconnected age.

Editorial Reviews

Review

"A particularly valuable contribution...is DeRosa's explanation of the flaws in statistical computer models of risk." -- The Phi Beta Kappa Key Reporter, Spring 2001

"For a broad audience, this book is the best introduction to this history and these issues..." -- Cato Journal, Fall 2001

"Impressive...DeRosa makes a strong case that official intervention has made matters worse, not better..." -- Milton Friedman

"This book is the proverbial tall drink of water after a long trek through an intellectual desert." -- Barron's, July 1, 2001

Important reading for all those interested in world economic issues and the future path of economic growth. -- Thomas S. Coleman, Ph.D., Director, Aequilibrium Investments Ltd

[A]n impressive survey and analysis of the crises of the 1990s. -- Milton Friedman, Senior Research Fellow, Hoover Institution, Nobel Economics Prize, 1976

[E]loquently shows how governments can use pseudoscience to disrupt markets and create additional financial risk and volatility. -- Nassim N. Taleb, President, Empirica Capital, LLC

About the Author

DAVID F. DEROSA is President of DeRosa Research and Trading, Inc. and Adjunct Professor of Finance at the Yale School of Management. He has worked at a number of Wall Street asset management firms and has traded foreign exchange for Swiss Bank Corporation, New York. DeRosa received his PhD in finance and economics from the Graduate School of Business of the University of Chicago. He is the editor of Currency Derivatives (Wiley), and the author of Managing Foreign Exchange Risk. DeRosa also contributes columns on international finance to Bloomberg News.

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Product Details

• Hardcover: 288 pages
• Publisher: Bloomberg Press (January 2001)
• Language: English
• ISBN-10: 157660036X
• ISBN-13: 978-1576600368
• Product Dimensions: 9.6 x 6.4 x 0.9 inches
• Shipping Weight: 1.4 pounds
• Average Customer Review: 5.0 out of 5 stars  See all reviews (6 customer reviews)
• Amazon Best Sellers Rank: #442,461 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

3 of 4 people found the following review helpful:

5.0 out of 5 stars Common Sense for Currency Buffs, April 17, 2001

By 

Paul Chludzinski (NY, NY USA) - See all my reviews

This review is from: In Defense of Free Capital Markets: The Case Against a New International Financial Architecture (Hardcover)

Professor DeRosa offers up a generous helping of reality in evaluating the currency crises of the past dozen or so years. From the first world foibles of the Bank of Japan to the third world of currency pegs, the currency calamities of the late twentieth century are thoughtfully presented in a lean read.

While perhaps giving short shrift to the political constraints facing policy makers in times of crisis, Mr. DeRosa nevertheless does well describing the environments and pre-conditions which ultimately fostered our most recent international financial catastrophes.

In this, the age of fiat money, unsustainable currency policies are easy prey for the worlds biggest market. Anyone interested in a brief but informative history of recent currency debacles will truly enjoy this book.

3 of 4 people found the following review helpful:

5.0 out of 5 stars Highly Recommended!, March 16, 2001

By 

Rolf Dobelli "getAbstract" (Switzerland) - See all my reviews
(HALL OF FAME REVIEWER)    (TOP 500 REVIEWER)    (REAL NAME)   

This review is from: In Defense of Free Capital Markets: The Case Against a New International Financial Architecture (Hardcover)

Yale University adjunct professor David F. DeRosa argues that markets are smarter than government ministries. Therefore, he contends, economic development should be left to the free market, since tighter regulations will only distort development. His detailed analysis of economic conditions focuses on factors leading to several crises, including the decline of the Mexican and Japanese economies in the 1990s and the Southeast Asian collapse of 1997. The subject is complicated and interesting, and the writing is often technical and sometimes complex. We at getAbstract call this book to the attention of scholars, executives and managers who have a serious interest in fiscal policy. And we do mean serious.

3 of 4 people found the following review helpful:

5.0 out of 5 stars Worth Reading, January 31, 2001

By 

Gerard J McDonald (New York, New York United States) - See all my reviews

This review is from: In Defense of Free Capital Markets: The Case Against a New International Financial Architecture (Hardcover)

This is a book well worth reading. You may not agree with everything position the author takes, but if you want to understand the nature of financial and currency crises, you should read this book. It provides an interesting chronology of the crises of the 1990s and presents the free market side of the argument about the genesis of these crises cogently and effectively.

It also presents an interesting perspective--that these crises are often caused by policy mistakes by the governments of the crisis countries. The argument is well documented and, while it is mostly likely not the only factor in play, it is one that is underappreciated in the literature.

Perhaps the most important contribution of this book is the emphasis that it places on the importance of exchange rate policy in a country's macroeconomic policy decisions. Mr. DeRosa has correctly pointed out that there is a troubling correlation between the nature of the exchange rate regime and the incidence of crisis.

Mr. DeRosa has written a useful and timely book that should be read by anyone interested in understanding how the global economy works (or, as is often the case, doesn't work).