My Review of "Can Financial Markets be Controllrd"

4 out of 5 stars

The author, Howard Davies, says the financial markets can't be controlled, pursuant to the 2008 crash and its aftermath.

He says the roots being the financialization of our economy, basically our major industry, based on debt/leverage to generate such huge profits it attracted many of our brightest minds away from pursuing more fundamentally sound careers to help society, all hidden in such complexity, it was, and still is, impossible to control. Further, the complexity bred mostly short term strategies, leading to a dysfunctional financial system.

Also, misguided thinking led to thinking globalization and technology reduced risks, but just increased risks.

And Dodd-Frank, he says is too complex, and the EU too flawed, for him to have much confidence.

He does say globalization and technology has led to more income inequality, and so much debt in the US made it worse by inflating asset prices. And he says this has led to more booms and busts, creating an intrinsically fragile economy intentionally because of the revolving door between Wall Street and government.

Anyway, I do recommend the book despite what I see as an omission like the funding of two wars and tax cuts for the rich, financed by lots of debt, making handling the crisis harder. Also, despite his pessimism, some of the US regulation is an improvement and though formal coordinated international regulation has not been achieved, there is more coordination than before. But, the book does present a good discussion of the risks in our financial system.