ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism [Hardcover]

Yves Smith (Author)

Book Description

Release date: March 2, 2010

Why are we in such a financial mess today?  There are lots of proximate causes: over-leverage, global imbalances, bad financial technology that lead to widespread underestimation of risk.
But these are all symptoms. Until we isolate and tackle fundamental causes, we will fail to extirpate the disease.  ECONned is the first book to examine the unquestioned role of economists as policy-makers, and how they helped create an unmitigated economic disaster.

Here, Yves Smith looks at how economists in key policy positions put doctrine before hard evidence, ignoring the deteriorating conditions and rising dangers that eventually led them, and us, off the cliff and into financial meltdown.  Intelligently written for the layman, Smith takes us on a terrifying investigation of the financial realm over the last twenty-five years of misrepresentations, naive interpretations of economic conditions, rationalizations of bad outcomes, and rejection of clear signs of growing instability. 

In eConned, author Yves Smith reveals:

--why the measures taken by the Obama Administration are mere palliatives and are unlikely to pave the way for a solid recovery

--how economists have come to play a profoundly anti-democratic role in policy

--how financial models and concepts that were discredited more than thirty years ago are still widely used by banks, regulators, and investors

--how management and employees of major financial firms looted them, enriching themselves and leaving the mess  to taxpayers

--how financial regulation enabled predatory behavior by Wall Street towards investors

--how economics has no theory of financial systems, yet economists fearlessly prescribe how to manage them

 

Editorial Reviews

Review

“The helplessness you feel, in the face of the demonic complexity of modern finance…set it aside, and pick up Yves Smith book ECONned.  Indignation and clarity and omnivorous knowledge come together in her writing, to explain how we, the taxpayers, are being meticulously fleeced.  Never go into an argument about the financial crisis unarmed again."--Stephen Metcalf, Slate Columnist

 

“In ECONned, Smith blows the top wide open on the role that economists and policy makers had in enabling Wall Street greed and misdeeds. This fascinating book reads like a detective story uncovering the roots of our disastrous financial philosophy-- the book must be read by everyone from Wall Street to Washington.”--Nouriel Roubini, Professor of Economics at New York University and founder of RGE Monitor

 

“Yves Smith has written a wonderful book which combines first hand knowledge of financial markets with a devastating attack on the scientific pretensions of economics. It is required reading by all those who want to dig below the surface of the worst economic collapse since the war to the intellectual and regulatory rottenness underlying it.”--Lord  Skidelsky, author of Keynes: The Return of the Master

 

“This book is a fascinating and insightful reminder that economics is like any other powerful tool.  It can be used to help understand the world and solve important problems—or to rationalize ridiculous behavior and overwhelm common sense.  Smith provides a brilliantly researched tour of good ideas gone bad.”--Charles Wheelan, author of Naked Economics: Undressing the Dismal Science

 

“Lost your job, lost your life savings, the country's going down the proverbial - want to know who did it? Yves Smith tells the tale of how bad economics created the foundations for the 'Madoff economy'. After you read the book, just collect your pitchforks and get ready to march on the University of Chicago or Wall Street or both! A refreshingly sane and honest analysis."--Satyajit Das, author of Traders, Guns & Money: Knowns & Unknowns in the Wonderful World of Derivatives

 

“If you only read one book on the global financial crisis, it should be Econned by "Yves Smith", an entertaining, thorough and damning indictment of the way that Western economists, bankers and politicians together messed up - and are still messing up - the global financial and economic system.”-- Kevin Rafferty, South China Morning Post

 

"ECONned by Yves Smith has three great merits: what it says is largely accurate, largely interesting, and largely new."  --Central Banking Journal

 

"Econned is one of the most important books on the financial crisis.  Yves Smith understands both the Street and finance theory in a way that few writers do.  Her argument that short sellers provided critical fuel for subprime lending flips The Big Short’s conventional wisdom on its head and belies Bernanke’s arguments that the housing bubble was the result primarily of a global supply glut.  There is no other book with an appendix (Appendix II, no less!) that is a must-read for understanding the financial crisis. --Adam J. Levitin, Professor of Law, Georgetown University Law Center

About the Author

Yves Smith is creator of the influential blog, Naked Capitalism, a top ranked economics and finance blog with over 250,000 unique visitors each month.  Smith has been working in and around the financial services industry since 1980 as an investment banker, management consultant, and corporate finance advisor. Smith has appeared, on CNBC, CNN, and FOX Business News, and has written over 40 articles in venues such as The New York Times, Slate, and the Christian Science Monitor.  She lives in Manhattan.

Product Details

• Hardcover: 368 pages
• Publisher: Palgrave Macmillan; 1 edition (March 2, 2010)
• Language: English
• ISBN-10: 0230620515
• ISBN-13: 978-0230620513
• Product Dimensions: 6.3 x 1.2 x 9.5 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (65 customer reviews)
• Amazon Best Sellers Rank: #517,392 in Books (See Top 100 in Books)

More About the Author

As Joe Costello, who writes on politics and finance, said in the Huffington Post,

"In case you haven't heard, women are leading the charge on financial reform. In the spirit of celebrating their contributions, I've put together a list of the top five heroes of 2009, in the hopes that their work will inspire us in the coming year....

"First, I'll start with Yves Smith, who I came across end of last summer. She has 25 years in financial services, worked for, amongst others, Goldman, McKinsey, and Sumitomo, and is also a graduate of Harvard and Harvard Business School. Her must-read blog is Naked Capitalism. She has shown great knowledge and greater courage -- and from my experience, these two traits are too rare together. Her writing is exceptional, and if you want a good overview of the financial mess and what's gone on over the past year and half, I highly recommend paging through her blog's archive. The president should replace Geithner with her. Time we had our first woman Treasury Secretary."

Most Helpful Customer Reviews

172 of 186 people found the following review helpful

5.0 out of 5 stars ECONNED March 3, 2010

By M. M. Thomas

Format:Hardcover|Amazon Verified Purchase

I've written quite a bit about the financial crisis, and God knows I've read nearly every book on the subject, and I have no hesitation in saying that if there is one book that gets it whole, and gets it right, and is THE book for the intelligent, thoughtful reader to turn to, it is ECONNED. This is not an anecdotal recitation of deal gossip (like, for example, Sorkin's book); it's not "source-based" journalism reflective of the way certain participants in the dire events that unfolded in 2007-2009 wish themselves to be seen. It lays out, in what is easily as clear, as direct, as smart and with as much force of fact as any financial writing today how exactly the fun and games that have nearly wrecked our economy and the lives of so many of us went down. Yves Smith is, unlike so many other writers feeding off the crisis, writing about it from the inside: with an unfailing grasp of where the details (where the devil lurks) fit into the larger pattern of financial perfidy and destruction, in this Doomsday Machine that Wall Street put together. The intelligent reader will understand that if you want to know why you're suffering from acute ptomaine, you have to understand what went into the sausage you got it from. And then you have to be made to see plain the kind of restaurant or market that serves up this toxic offal. And then the regulatory failures that allow such places to be licensed. We have undergone one of the great crises in this nation's history. It needs to be seen plain and understood. Deadline-driven blahblahblah won't get the job done. But ECONNED does. I cannot recommend it highly enough.

95 of 105 people found the following review helpful

5.0 out of 5 stars Great ECON Blogger Now in Book Form March 3, 2010

By Great Faulkner's Ghost TOP 500 REVIEWER

Format:Hardcover

I have been a huge fan of author Yves Smith's Naked Capitalism blog for years now, and this book is a major triumph, putting in one place and fully developing the major themes that Smith has explored on her blog over the course of the recent financial crisis. While this might appear to be well-plowed territory, Smith tells it as an economics story that is really a story of a failed democracy. The linchpin of her work is the ascendant power of Wall Street over Main Street during the Greenspan era and now the Bernanke era. Complicit with politicians, financial regulators, and the revolving door of government service, the big Wall Street firms and banks have, according to Smith, seized the political process to serve their narrow, financial interests instead of those interests that serve a well-functioning polity. However, despite the seemingly inflammatory thesis, this book is no rant. Smith, an industry insider, is one of the smartest and expert observers of the flawed process that we now have, and the book is loaded with incisive explanations that pull it all together for the average reader in clear and at times thrilling language. In the broadest sense, this is a moral tract as much as an economics and political one. The moral outrage, while controlled and polite, is palpable on every page. In essence, this is a deeply informed book that does what economics and political tracts almost never do: it tugs at the heart as well as at the mind.

71 of 80 people found the following review helpful

5.0 out of 5 stars How the Invisible Hand is picking our pockets! March 3, 2010

By N. Taubenslag

Format:Hardcover

I was skeptical that we needed another book on the current financial crisis. But Econned provides a different and invaluable take on the issues. The book shows how corporate and governmental misunderstanding -- coupled with misuse of free market ideology -- enabled predatory practices in the financial services industry, and how current systems can't correct the problems. The book held my interest more than most economics and business books with its anecdotes, historic perspective, and Smith's engaging (sometimes irreverent) writing style.

While Econned covers technical points on economics and financial instruments, it's jargon-free enough that I can share this one with my non-business friends. And I plan to share it, since the explanations enable the author to build the case by Chapter 9 of how one company in particular structured operations to maximize its own profits while devastating major economic sectors. The book achieves a hat-trick of sorts: cogently explaining how and why the current policies are flawed, naming names and revealing exactly how some players took advantage of the flaws, and showing how current reform proposals need to be changed to fix the problem.