Alchemists Of Loss: How Modern Finance And Government Intervention Crashed The Financial System

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Over the last thirty years, capital markets have been restructured through the tenets of modern finance. This has been enormously profitable for the financial services sector. However, these innovations, coupled with unsound risk and regulatory practices have proved disastrous for the global economy. In a clear and accessible style, ex-investment banker and financial journalist Martin Hutchinson, and highly respected academic, Kevin Dowd show how modern finance combined with easy money threatened to bring down the world financial system. At the heart of the book is modern finance as a U.S. invention, the theories and practices associated with them, and the changes they made in business models and risk management on Wall Street and other major financial centers. The Alchemists of Loss will help you to understand how our financial system crashed and show you what it will take to make sure this won't happen again as we move forward.

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Kevin Dowd is a highly published and respected academic who currently holds the post of professor of financial risk management at Nottingham University Business School. He has written extensively on macro, monetary and financial economics, financial regulation and central banking (and their opposite, free banking), finance and financial risk management. He has been a radical critic of financial regulation, central banking and Keynesian economics for many years, and has also been very critical of the practices and thinking behind modern financial risk management in his widely-read columns in Financial Engineering News. He has long-standing affiliations with the Cato Institute (Washington DC) and the Institute of Economic Affairs (London). Martin Hutchinson is a financial journalist with over 2 decades of experience in the financial markets. He is contributing editor to AGORA's Money Morning, and Money Map newsletters, and recently set up PermanenetWealthAdvisor.com, an investment newsletter focusing on high dividend funds. He is also a correspondent for breakingviews.com, providing groundbreaking financial market insights for over 15,000 subscribers and writes the weekly Bear's Lair column for Prudent Bear, a mutual fund. Previously, he was Business and Economics Editor at United Press International (UPI). Martin has a long and illustrious Wall street career, and provides regular commentary on markets issues for CNBC, Fox Business, BBC World and more, while his market commentary is regularly featured in a number of publications including the New York Times, The Daily Telegraph and a number of other global publications. Table of Contents Acknowledgements & Dedication. Foreword. Part One: Past Successes and Disasters. Introduction. Pre-Modern Finance. Lessons from Past Financial Crises. Part Two: The Modern Financial Theory Engine. Theoretical Foundations of Modern Finance. Modern Financial Theory's Hideous Flaws. Risk Management: Daft Theory, Dodgy Practice. Part Three: Interactions with the Real World. The Real World Becomes Modern Finance-friendly. Modern Finance Captures Wall Street. And Wall Street Metamorphoses. Derivatives and Other Disasters. Part Four: Policy Accommodates Modern Finance. Loose Money. Government Meddling in the Financial System. Part Five: G'tterd ‘mmerung. Bubble, Burst, and Panic. The Slope Down Which We're Heading. Part Six: Charting a New Way Forward. The Math of Proper Risk Management. Back to the Future -- A New Vision of Finance. A Blueprint for Reform. Lessons to Take Away. Bibliography. Index.