Fearful Rise of Markets, The: Global Bubbles, Synchronized Meltdowns, and How To Prevent Them in the Future,

by John Authers

Overview

Are we barreling toward another massive global financial catastrophe?

 

How can so many bubbles form all at once? Why are so many “disconnected” markets now capable of collapsing in unison? In this remarkably readable book, award-winning Financial Times columnist John Authers takes on these critical questions and offers deeply sobering answers.

 

Authers reveals how the first truly global super bubble was inflated—and might now be inflating again. He illuminates the multiple roots of repeated financial crises: a massive shift in investing power from individuals to big institutions; the migration of key decisions from banks to capital markets; the wholesale financialization of many asset classes; and fundamental failures of both theory and policy.

 

The Fearful Rise of Markets presents a truly global view, avoiding oversimplifications and ideology as it outlines how we got here and where we stand. Even more valuable, it offers realistic solutions—for decision-makers who want to prevent disaster and investors who want to survive it.

• The herd grows ever larger—and more dangerous
  How institutional investing, indexing, and efficient markets theory promote herding
• Cheap money and irrational exuberance
  Super fuel for super bubbles
• Too big to fail: the whole story of moral hazard
  Banks, hedge funds, and beyond
• Danger signs of the next bubble
  Forex, equity, credit, and commodity markets move once more in alignment

Product Details

ISBN-13:	9780131388147
Publisher:	Pearson Education
Publication date:	04/08/2010
Sold by:	Barnes & Noble
Format:	eBook
Pages:	256
File size:	1 MB

About the Author

John Authers, investment editor for the Financial Times, serves as its main commentator on international markets. In this role, he has become one of the world’s most influential financial journalists, with bylined columns on display pages of Financial Times five days a week. He will soon take over as the head of the Financial Times’ flagship Lex column.

 

Authers speaks worldwide and appears frequently on major U.S. and global media, including the BBC, CNN, MSNBC, NPR, and PBS. He was recently honored by the State Street Institutional Press Awards as the UK’s Investment Journalist of the Year for his coverage of the collapse of confidence in investment theory.

 

His book, The Victim’s Fortune, coauthored with Richard Wolffe, earned him the prestigious Best of Knight-Bagehot Award.

 

Authers lives and works in New York with his wife Sara Silver, also a financial journalist, and their three children.

Table of Contents

Acknowledments     ix

About the Author     xii

Foreword     xiii

Timeline     xvi

 

Chapter 1: The Fearful Rise of Markets     1

 

Part I: The Rise

Chapter 2: Investment Becomes an Industry     9

Chapter 3: Indexes and Efficient Markets     16

Chapter 4: Money Markets Supplant Banks     25

Chapter 5: From Gold Standard to Oil Standard     32

Chapter 6: Emerging Markets     40

Chapter 7 Junk Bonds     48

Chapter 8: The Carry Trade     55

Chapter 9: Foreign Exchange     62

Chapter 10: Irrational Exuberance     69

Chapter 11: Banks Too Big to Fail     76

Chapter 12: Hedge Funds     83

Chapter 13: Dot Coms and Cheap Money     90

Chapter 14: BRICs     97

Chapter 15: Commodities     104

Chapter 16: Credit     112

 

Part II: The Fall

Chapter 17: Ending the Great Moderation     120

Chapter 18: Quant Funds     127

Chapter 19: Trust     133

Chapter 20: Bank Runs     139

Chapter 21: Bastille Day: Reflexive Markets     145

Chapter 22: Lessons from Lehman     152

Chapter 23: Politics and Institutions     158

Chapter 24: The Paradox of Diversification     163

 

Part III: The Fearful Rise

Chapter 25: Decoupling     171

Chapter 26: Banks Bounce     179

Chapter 27: A New Bubble?     186

Conclusion: 2010 and After     194

 

Notes     202

Bibliography     215

Index     222