The Road to Financial Reformation

The Road to Financial Reformation : Warnings, Consequences, Reforms

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Our financial crisis: what happened, how we got here, and what needs to be done Henry Kaufman-an esteemed economist and statesman-is one of the most preeminent financial figures of the day, with a history of success from the 1980s, when his firm, Salomon Brothers, ruled the bond markets. In The Road to Financial Reformation , Dr. Kaufman, who has spent a lifetime entrenched in the world of finance, provides an insightful account of the history and impact of post-World War II financial markets on the economy-what happened, how we got to where we are today, and what needs to be done. Drawing on his vast breadth of knowledge and experience, Kaufman reveals the mistakes that got us into this debacle, the consequences-as they have not been fully realized-and how to put our derailed economy back on track. This book details Dr. Kaufman's warnings and concerns expressed repeatedly throughout the last quarter century, and shows that what he predicted came to pass.
Provides an insightful account of the history and impact of post-World War II financial markets on the economy Explores the erosion of credit ratings on corporate debt in the late 1980s and the rapid increase in financial concentration of institutions Discusses the blinding faith in models that rely on historical data but fail to take into account economic and financial market structural changes With his breadth of knowledge and experience, Kaufman details that this crisis was foreseeable (he saw it coming), and how we created this history-making financial crisis. He also explains the consequences still to come, and presents solutions on how we can recover and reform the markets.
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Product details

  • Hardback | 288 pages
  • 162 x 233 x 24mm | 518g
  • John Wiley & Sons Ltd
  • Chichester, United Kingdom
  • English
  • 0470532122
  • 9780470532126
  • 861,484

Flap copy

The crisis of 2007-2008 will reshape the financial world for years to come. Some of the key consequences--such as the revival of household savings, the end of risk modeling, and the persistence of the U.S. dollar as the leading reserve currency--will be welcomed. But others--most notably, the explosion of public debt and the acceleration of financial concentration--portend more trouble for the future. There is no quick fix, says esteemed economist and statesman Henry Kaufman. Expectations for solvency, profits, and growth are suffering severe retrenchment, and the collapse that began in 2007 will affect investor behavior for years to come. Political leaders need to act boldly while ensuring that our market-based economy is not undermined. We need a new set of rules and regulations so that our financial institutions balance entrepreneurial drive with fiduciary responsibilities.

In The Road to Financial Reformation, Kaufman provides an insightful account of the history and impact of post-World War II financial markets on the economy--what happened, how we got to where we are today, and what needs to be done. Drawing on his vast breadth of knowledge and experience, Kaufman reveals the mistakes that got us into this debacle, the consequences--as they have not been fully realized--and how to¿put our derailed economy back on track. He recounts his neglected early warnings about ballooning corporate and personal debt, the trend from financial segmentation to concentration, and the inadequacies in financial oversight. And he suggests a new kind of institution for regulatory oversight to supervise only the largest U.S.-based financial institutions. Intensive official supervision, he asserts, will help make financial conglomerates too good to fail. And because of the thoroughly global nature of today's financial markets, other leading economies throughout the world should be strongly encouraged to establish similar supervisory authorities.

In the financial crises of the early postwar decades, both the economy and financial markets rebounded quickly. Unfortunately, that is far from likely this time around. But with The Road to Financial Reformation, we will at least see a path for moving in the right direction.
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Back cover copy

Praise for The Road to Financial Reformation

"Those who cannot remember the (financial) past are condemned to repeat it. Yet our data-oriented culture suffers from willed amnesia. With this book, one of America's greatest financial memories, Henry Kaufman, shares his treasure. Buy it for Figure 12-1 alone, a roster of the past half-century's financial crises and their Kaufman-diagnosed causes. You'll invest more confidently with Kaufman's list in your breast pocket."
--AMITY SHLAES, author, The Forgotten Man: A New History of the Great Depression, and Senior Fellow, Council on Foreign Relations

"A devastating critique of our troubled financial system with clear explanations of how we got here, and what we must do to get our economy back on track--written by someone who consistently and correctly warned us of the dangers. If Presidents, Congresspersons, and Federal Reserve Chairmen had listened to Henry Kaufman, we wouldn't be in our current fix."
--BILL BRADLEY, former U.S. Senator

"Henry Kaufman, over more than a half century, has seen it all: the risks, the rewards, the foibles of financial markets, and now the mother of all financial crises. His prolific writings have long commanded attention on Wall Street--but not enough. Too often his warnings, his prognoses, his recommendations have been unheeded. Now--drawing in part on earlier writings--he lays out what has gone wrong and why. Dr. Kaufman, in The Road to Financial Reformation, does not shrink from setting guidelines for rebuilding a stronger, safer, and more productive global financial marketplace. They need careful thought by practitioners and officials alike."
--Paul Volcker, Chairman of the Economic Recovery Advisory Board and former chairman of the Federal Reserve Board
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Table of contents

Foreword by Niall Ferguson. Acknowledgments. Introduction. PART I: IN PERSPECTIVE. 1 Past Blunders and Future Choices. 2 Reflections on Business, the Lessons of History, and Globalization. 3 If Adam Smith Were Alive Today. PART II: NEGLECTED EARLY WARNINGS. 4 Troubling Trends in Financial Markets and Official Policies. 5 Debt: The Threat to Economic and Financial Stability. 6 The Decapitalization of American Corporations. 7 Shortcomings in Financial Oversight. PART III: THE BIGNESS DILEMMA. 8 From Financial Segmentation to Concentration. 9 Financial Concentration in Economic Thought. 10 Do We Still Need Glass-Steagall? 11 Banking and Commerce Should Not Merge. PART IV: FINANCIAL CRISES. 12 Postwar Financial Crises, 1966-2001. 13 The Great Financial Crisis of 2007-2009. PART V: POLICY FAILURES AND REFORMS. 14 Public Policy and the Markets. 15 The Perils of Monetary Gradualism. 16 The Fed and the Governance of Financial Institutions. 17 Transparency and the Fed. PART VI: PROSPECTS. 18 Prospects for Interest Rates. 19 The Financial Consequences of the Credit Crisis. Selected Bibliography. About the Author. Index.
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Review quote

" an accessible exposition of the causes and consequences of the market trauma..." (The Economist, August 2009). "...well grounded...His central insight about banking is old, simple, but profound..." (Financial Times, August 2009). "...this is a good read -- and a thought-provoking one." (Financial World, September 2009).
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About Henry Kaufman

Henry Kaufman, PhD, has been President of Henry Kaufman & Company Inc., an investment management and economic and financial consulting firm, since April 1988. For twenty-six years, Kaufman was with Salomon Brothers Inc., where he served as a managing director, vice chairman, and member of the executive committee, and was in charge of Salomon's four research departments. He currently is a trustee at New York University; Chairman Emeritus of the Board of Overseers at the NYU Stern School of Business; Chairman Emeritus of the Institute of International Education; and trustee of the Norton Museum. Kaufman is author of On Money and Markets and Interest Rates, the Markets, and the New Financial World , and a regular contributor to the New York Times, Wall Street Journal, and Financial Times (London). He received a BA in economics from New York University, an MS in finance from Columbia University, a PhD in banking and finance from the New York University Graduate School of Business Administration, and was awarded honorary doctorates from NYU, Yeshiva University, and Trinity College.
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Rating details

26 ratings
3.57 out of 5 stars
5 23% (6)
4 27% (7)
3 38% (10)
2 8% (2)
1 4% (1)
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