The New York Times Book Review - Benjamin Heller
While the gravamen of its complaint is old, Other People's Money is not merely another broadside content to denounce finance's dysfunction, but rather a masterly attempt to locate its various origins and connect them with analytical and theoretical rigor. Kay provides by way of context a panoptic overview of the history, evolution and structure of the financial system in the United States and Britain, one that is impressive in its ability to weave together a comprehensive range of material, from the mechanics of banking to the Gaussian copula, in elegant, jargon-free prose. He confidently employs many perspectives: economic, historical, legal and psychological. Call this technique a Lombard Street for the 21st century.
From the Publisher
A Financial Times’ Book of the Year, 2015
An Economist Best Book of the Year, 2015
A Bloomberg Best Book of the Year, 2015
“Other People’s Money is not merely another broadside content to denounce finance’s dysfunction, but rather a masterly attempt to locate its various origins and connect them with analytical and theoretical rigor. Kay provides by way of context a panoptic overview of the history, evolution and structure of the financial system in the United States and Britain, one that is impressive in its ability to weave together a comprehensive range of material, from the mechanics of banking to the Gaussian copula, in elegant, jargon-free prose.” —New York Times Book Review
“Mr. Kay is a brilliant writer with an ability to explain the role in the 2007-08 financial crisis of such concepts as credit default swaps, collateralized debt obligations and moral hazard… [He] is at his best in reminding us that the financial system is still fragile and in explaining that more regulation is not the answer… We can applaud his call for a cultural change that will enhance ethical standards and put the customer first.” —Wall Street Journal
“[Other People's Money] should be read by everyone concerned with preventing the next crisis...[Kay] skewers the pretensions of the finance sector and questions whether its high rewards reflect its true economic contribution. Barely a page goes by without an acute observation or pithy aphorism. ... Above all, the finance sector should be judged on the same basis as other industries; if an activity is unprofitable without taxpayer support, it should not occur. ‘Our willingness to accept uncritically the proposition that finance has a unique status has done much damage,’ the author wisely says. Let us hope those in authority will listen.” —The Economist
“Kay's insistence on stepping back, on judging finance by the humdrum standards of any other industry, with its self-serving mystique and aura of inevitability stripped away, makes Other People's Money one of the best two or three books I've read on the crash.” —Clive Crook, Bloomberg View
“This important book is simultaneously a clear primer on modern financial systems and a scathing indictment of them.” —Foreign Affairs
“An important new book.” —Robert Lenzner, TheAtlantic.com
“A challenging book that will add to ongoing discussion and debate.” —Booklist
“The theme of broken governance and accountability is echoed in economist John Kay’s Other People’s Money: The Real Business of Finance, which provides an accessible exposé of the complex and layered modern financial system and the failure of laws and regulations to protect the public. Whether his specific proposals are the best approach, policy won’t change unless many more people recognize the issues and demand better. Lack of political will remains the biggest challenge.” —Anat Admati, George G.C. Parker Professor of Finance and Economics, Stanford Graduate School of Business
“Thanks for writing this book. Only [John Kay] could have done it. This is going to be a classic.” —Frank Partnoy, Professor of Law and Finance, University of San Diego School of Law and bestselling author of Fiasco and Wait
“Kay is an admirable debunker of myths and false beliefs—he can see substantial things that others don’t.” —Nassim Nicholas Taleb, author of The Black Swan
“Kay is both a first-class economist and an excellent writer.” —Financial Times
“[O]ne of Britain’s leading economists.” —The Economist
Library Journal
09/01/2015
Kay, a British economist, author, and visiting professor at the London School of Economics, has an interesting perspective on the world of finance in the United States, the UK, and Europe. While finance is necessary to modern societies, Kay considers how finance did, does, might, and should work. The book's first part includes the history of economics, as well as modern political, intellectual, and technological shifts. The second section tries to answer questions about the purpose and quality of modern financial activity. The third deals with structural reforms, intending to supply a blueprint for the future. Kay feels that regulation is part of the problem as is too much government involvement. He looks at financial crises in the United States, UK, and the Eurozone and feels that financial executives are using other people's money to enrich themselves and that baby boomers are profiting at the expense of future generations. Since policymakers did not restructure after the last crisis, Kay says they will get another chance after the next one. VERDICT Not for the merely curious. If words such as financialisation, demutualization, securitization, and intermediation are exciting, it's a definite read.—Bonnie A. Tollefson, Rogue Valley Manor Lib., Medford, OR
Kirkus Reviews
2015-07-15
All's not well in the counting house, nor in a capitalist system grown increasingly unequal and corrosive."We need a finance sector to manage our payments, finance our housing stock, restore our infrastructure, fund our retirement and support new business," writes British economist Kay (Obliquity: Why Our Goals Are Best Achieved Indirectly, 2010, etc.). By his account, we don't have a sector that does much of that necessary work; instead, intermediation, buying and selling abstractions rather than real things, is the new method. In fact, writes the author, lending to entities that make things, "which most people would imagine was the principal business of a bank," makes up only about 10 percent of the sector's business. The rest lies in intermediation, which is another way of saying that "the industry mostly trades with itself, talks to itself and judges itself by reference to performance criteria that it has itself generated." Take securitized mortgage loans, bundled and traded like baseball cards: there's a recipe for disaster, and in the absence of meaningful external oversight, it and other contributing factors to financial meltdown are not likely to be tamed anytime soon. Kay is no Chicken Little; his arguments are calmly made, backed by such evidence as can be teased out of the reclusive industry. In the meantime, he notes, many aspects of the financial sector, such as the lending and deposit channels, are "ripe for disruptive innovation," just as in recent years the increased use of credit and debit cards and other electronic tie-ins to bank accounts have made cash unnecessary in most daily transactions. Kay holds forth for increased regulation that is focused "more on the interests of consumers and less on the integrity of market processes"—in other words, the more vigorous application of Dodd-Frank and other regulatory regimes that Congress is now hurriedly trying to dismantle. Sobering and lucid. If you're moved to keep your money in a sock after reading this, you'd have cause.
