More Money Than God: Hedge Funds and the Making of a New Elite
Written by Sebastian Mallaby
Narrated by Alan Nebelthau
4/5
()
About this audiobook
Sebastian Mallaby
Sebastian Mallaby is the Paul Volcker Senior Fellow in International Economics at the Council on Foreign Relations and a Washington Post columnist. He spent thirteen years on The Economist, covering international finance in London and serving as bureau chief in Southern Africa, Japan and Washington. From 1999 to 2007 he was a member of the editorial board of the Washington Post, focusing on globalization and political economy. His previous books are The World's Banker (2004) which was named as an Editor's Choice by the New York Times and After Apartheid (1992), which was a New York Times Notable Book. He lives in Washington with his wife, Zanny Minton Beddoes, the economics editor of The Economist.
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Reviews for More Money Than God
69 ratings4 reviews
- Rating: 3 out of 5 stars3/5The book was a little to long and there wasn't a central theme.
- Rating: 5 out of 5 stars5/5Fantastic, highly recommended. Basically three books in one: history of major economic/financial events over the last fifty years, an analysis of hedge funds and the financial economics, and the motivation for a policy recommendation.
Mallaby has lots of nuance, appreciates the pro and con of every argument, but basically the main arguments of his book are: (1) hedge funds can get above market returns by exploiting information or anomalies that others do not; (2) in the process they improve the allocation of capital and, on balance, stabilize markets by, for example, minimizing bubbles by selling short; and (3) when they fail, hedge funds rarely pose a systemic risk to the economy or financial system, when they go bust it is generally another hedge fund that rushes in to take them over (see points 1 and 2 above).
Mallaby manages to convey all of this in a suspenseful page turner that uses well chosen anecdotes and stories to keep you engaged from beginning to end. - Rating: 3 out of 5 stars3/5“Why is it, particularly in the financial industry, we see such limitless greed? You have to look at the nature of money. Money is not like a commodity, commodities need inputs, money doesn’t need any inputs, so from the supply-side there is no constraint whatsoever, you can produce it in limitless quantities, technically speaking. Now from the demand side, the demand for money is equally limitless. So you have limitless demand and supply, in principle constrained only by regulation. So people operating in such a system if you de-regulate it, you automatically get limitless behavior.” – Dirk BezemerIn the useful part of the book, Sebastian Mallaby takes us through a brief history of hedge funds. Hedge funds are defined by their 20% performance fees, their ability to go long and short, and their obscene use of leverage. Mallaby focuses on the heads of the most successful funds and describes some of the great financial booms and busts as seen from their eyes. In the less useful PR part of the book, Mallaby gets an opportunity to indulge in his worship of money, incessantly reminding us of a fund’s size and rate of return. And more troublingly he engages in an apologia for the hedge funds and their operators. First you have to understand that Mallaby is about establishment as you can get---son of the UK ambassador to France, Eton, Oxford, Washington Post editorial board, Council of Foreign Relations. His goal as dutiful public relations flak to his class is to convince us (basically the 99%) that hedge funds are on balance good (or at least no worse than any other institutional investment vehicle) and would do an even better job if…wait for it…they were less regulated.For example, he defends a particularly noxious fund manager---used insider knowledge to make trades, controlled shadow “third markets”, cornered a Treasury auction and then applied a short squeeze on investors---with the vapid defense that such sociopathic behavior was good for the economy. That is, we should accept the crimes (never proven!) because on balance the fund manager helped the economy. Astonishing.Another way Mallaby defends hedge fund managers is to tell us that hedge funds actually do something for the real economy---provide liquidity or risk insurance, or allocate capital to those who can best use it, or something. But in actuality they make computer-automated trades in millionths of a second, not knowing or caring what it is they are trading.The history shows hedge funds can be destructive to ordinary men and women. Soros’s attack on the English pound and Thai bhat are discussed in the book but it’s mitigated in Mallaby’s eyes because Soros wasn’t completely predatory in bringing about the collapse of all the East Asian economies. Today, great reserves of dollars must be held by foreign governments to stave off speculative attacks from hedge funds. When it comes to choosing between funding an inoculation program or buying Treasury Bills, the governments, for their own safety, have to choose T-bills. And in so doing reinforce the US-dominated global financial system. This bigger picture seems lost on Mallaby.Written in the wake of the global financial crisis, Mallaby offers hedge funds as an alternative to banks to manage risk. Although he puts in a plug for progressive taxation, the main message of the book is that hedge funds have it all handled, get out of their way. Here I take Bezemer’s side and say that’s asking for trouble.
- Rating: 5 out of 5 stars5/5More Money Than God is one of the best books I've read so far this year. Who knew financial history could be so compelling and entertaining. I have almost no background in finance but this book taught me a lot, and kindled a desire to become a more serious student of finance. I didn't even know what a hedge fund was before picking up this book, but by its end I was able to guess how the markets might respond to the most recent global disaster (Japan Earthquake/Flood of 2011), and intelligently follow along with CNBC commentators. The information in the book is great, and so are the human stories. George Sorros is the most famous, and there are many others whose careers are truly the stuff of legend. Apparently there's something satisfying watching someone make tons of money and then lose it. So are the stories of underdogs armed with nothing but a good idea working outside the system beating it at its own game. The other financial book I read recently, The Big Short, is similar for the drama, but this book is better for the information and broader context, though a little more difficult, I would recommend it highly to anyone as you can read it just for the plot, or in more detail about how finance operates through successes and mistakes.