The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy (Vintage),   ISBN:9780307473455

Customer Rating: 

Cooper manages to cram into 170 small pages ideas that a competent author sympathetic to the expenditure of his readers' time might encompass in 15 small pages.

Its ideas are simple:
(1) The notion of "efficient markets" has, at least since Maynard Keynes, been discredited.
(2) Financial markets differ from markets for goods and services: while the latter can exhibit negative feedback, the former almost invariably are plagued with positive feedback.
(3) Positive feedback, as every engineer knows, is subject to runaway behavior limited only by some form of undesirable event--a crisis.
(4) All this was worked out by James Clerk Maxwell (1868), John Maynard Keynes (1934), and Hyman Minsky (1974). It is not applied to best effect, even by central bankers, notwithstanding that these are insulated from political interference.

The book includes a few persuasive examples and (of course) avoids even a hint of differential equations.

The book has one welcome aspect--reminding its reader of James Clerk Maxwell's 1868 paper "On Governors". It cribs this by excerpting its first two pages.

Customer Rating: 

This book was recommended to me, an engineer, by my bond-trading brother-in-law; I usually don't pick these books up. After a slow start, I am happy I did. Cooper, while at times repetitive, makes some nice points that made me think about the economy in a new way. At heart he is a Keynesian. He has a few theses. Most effort is spent on challenging the efficient market hypothesis, and arguing that asset prices are inherently oscillatory, and questioning the proper role of a central bank in controlling those oscillations. He introduces standard notions from engineering control theory, using J.C. Maxwell's theoretical foundation, to discuss how a central bank may or may not play the same role as successful and unsuccessful 19th century steam engine regulators. Though he keeps the engineering physics simple, his idea has merit: non-linear systems require great skill to control. Those familiar with notions from non-linear dynamics (e.g. limit cycles, chaotic oscillations, stable and unstable amplitude growth) will find seeds for their own ideas which might have application to the economy.

The book is written in a readable and provocative style, not unlike that found the "The Economist" magazine. Recommended.

Customer Rating: 

Analyst George Cooper's book seems to prioritize passionate (although informed and understandable) advocacy over a strictly reportorial explanation of economic ideas. He clarifies his belief that much of the present fiscal misery flows from decades of unwarranted confidence in the "Efficient Market Hypothesis." He offers the work of 1970s American economist Hyman Minsky, 19th century physicist James Clerk Maxwell and the inventor of fractal geometry Benoit Mandelbrot, to support his claim that experts could detect, govern and manage economic bubbles before they pop. He also recommends a dose of inflation plus governmental controls on credit creation to fix the economic system. He summarizes Minsky, uses Maxwell's work on steam engine governors as a metaphor for managing credit creation and applies Mandelbrot's observation of a memory effect to the economy. Even though his presentation of the efficient markets fallacy seems oversimplified in parts, his theory is interesting. getAbstract recommends Cooper's background research on fiscal policy ideas, if not on every facet of fiscal events. The more government controls you favor, the more likely you are to be persuaded by his passion.

Customer Rating: 

Perhaps I don't agree with everything the author says in the book, but it is written well, easy to understand, and offers a different perspective from what we often hear on TV or read in the newspapers. At a minimum, it makes one think about various issues that affect all of our lives, and for that I give it 5 stars.

Customer Rating: 

This is one of the best books i have read recently. George Cooper had got to the bottom of the current Financial meltdown with great clarity and simplicity that every one can understand.

I would recommend this book - 100%

Raj