The best business books of 2009
Fool's Gold
Gillian Tett
Little Brown Books Group, £12.99
Financial innovations don't destroy financial systems, people destroy financial systems. This, at least, is how Gillian Tett sees it. So when she considered the financial crisis, she did so via a study of the tribe at JP Morgan who unleashed catastrophe. She starts in Florida, describing how a team on an "off site" came up with credit derivatives in between hijacking golf carts and chucking each other in the pool. She follows the team through their fortune making and the global meltdown. Tett has been one of the best writers on this crisis. Without her, much of the City would still not be sure why they nearly went bust. That's reason enough to read Fool's Gold. But the book is also a gripping read, one that reminds us that 'nothing in society exists in a vacuum' and that we'd all be wise to keep a close eye on our financiers in future.
Super Freakonomics
Steven D Levitt and Stephen J Dubner
Allen Lane, £20
Levitt and Dubner's first book, Freakonomics, caused some controversy. There was the shocking revelation that estate agents don't care what price they get you, for example. But it was nothing on the noise Super Freakonomics is making. The sequel announces that you could be better off driving drunk than walking drunk. Worse, it looks at global warming in a not entirely conventional way (favouring geo-engineering over carbon targets). That's got it a million-odd angry Google entries. But it's worth reading the book beyond the hysteria. It makes the counter-intuitive make sense, is well written and funny. It also has its share of cheering news: who'd have thought the terminally ill are capable of dragging out life for a couple of extra weeks in order to save on inheritance tax?
Wall Street Revalued
Andrew Smithers
John Wiley, £16.99
Andrew Smithers knows his stuff. His last book, Valuing Wall Street, which warned that markets were nastily overvalued, appeared in early 2000. Here he argues that there are two valuation methods (the Q ratio and the cyclically adjusted p/e ratio or CAPE) that work to tell us when markets are overvalued. He goes on to push the idea that if it is possible to value a market then it is also possible (and necessary, given the economic pain bubbles cause) for central banks to watch stockmarkets and adjust their policies accordingly. So if they see a bubble forming they should do something to burst it sooner rather than later. This, as The Economist points out, would once have been a controversial thing to suggest. But in the wake of the mess central banks have made over the last few years it now seems to make perfect sense.
How Markets Fail
John Cassidy
Farrar Straus Giroux, £25
Cassidy's last book, Dot.con, was one of the best books on the financial crisis of the early part of this decade, and this is one of the most readable on the sub-prime crisis of the latter part. Cassidy's main point is that the long-held belief among modern economists that the free market is inherently stable – that it will self correct – is wrong. The 'invisible hand', as repeated crises surely prove, doesn't always exist. This is a big deal, as noted by Alan Greenspan earlier this year. He had "been going for 40 years or more with very considerable evidence that it [the market] was working", so was "shocked" to find it wasn't. Cassidy concludes we need a framework of "reality-based economics", which takes greed and fear into account, and sees that markets can't always survive without government intervention.
Fleeced!
David Craig and Matthew Elliot
Constable, £8.99
If you really want to upset yourself this Christmas, get a copy of Fleeced! How we've been betrayed by the politicians bureaucrats and bankers and how much they've cost us, by David Craig and Matthew Elliot. Want to know where the £3trn-odd the "ruling elite" has spent over the last decade has gone? Fleeced points the finger at the avarice and mismanagement across the public sector in enough detail to make sure that absolutely no readers will get through it without a few blood-boiling moments.
So that's your taxes. But where do your savings go? For that answer, turn to Peter Hargreaves' In For A Penny, A Business Adventure, a plain-speaking run-down of the creation of investment giant Hargreaves Lansdown – from its start in a spare bedroom to its 2007 float.
Read this one for two reasons – to find out how a real entrepreneur operates and, possibly more importantly for most of us, properly to understand how the investment management industry really works. Harriman House Ltd, £9.99.
Finally, back on the subject of economics, I'd strongly recommend Graham Turner's No Way To Run An Economy. The Independent's Hamish McRae describes Turner as "a clear and independent voice in a confused and noisy world" – and that is precisely how he comes across in this analysis of the policy mistakes that tipped the world from financial crisis into recession last year. Pluto Press £12.99.