Sabotage Audiobook By Anastasia Nesvetailova, Ronen Palan cover art

Sabotage

The Hidden Nature of Finance

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Sabotage

By: Anastasia Nesvetailova, Ronen Palan
Narrated by: Jared Zak
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About this listen

"I don't like the word 'sabotage'," - a former Goldman Sachs trader admitted. "It's just harsh.... Though, frankly, how else do you make money in this business...I mean, real money."

The fundamental motive for financial innovation is not to make the system work better, but to avoid regulation and oversight. This is not a bug of the financial system, but a built-in feature. The president of the US is not a tax avoider because he is an especially fraudulent financier; he's a tax avoider because he is a wealthy man in a system premised on such deceit. Finance is an industry of sabotage.

This book is a brilliant, intellectual detective story that traces the origins of financial sabotage, starting with the work of a prescient American economist who saw the capacity for banks and businesses to dissemble and profit as early as the 1920s. What was accomplished modestly in the first half of the 20th century became a booming global industry in the 1980s. Financialization took over everything, culminating in instruments so complex and confusing their own creators were being destroyed by them in 2008.

With each financial bust, people expect to hear who the culprit was, and cynically know to not expect much punishment to ever reach them. But the innovation of this book is to show that each individual gaming the system isn't a crook - the whole system is sabotage.

PLEASE NOTE: When you purchase this title, the accompanying PDF will be available in your Audible Library along with the audio.

©2020 Anastasia Nesvetailova and Ronen Palan (P)2020 PublicAffairs
Banks & Banking Economic History Politics & Government Global Financial Crisis Business United States
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A few fresh insights on gaming the system

In a system of supposedly efficient markets and pervasive competition, how do firms finagle big streams of excess profits? This book hits on some vital points and I'm having flashes of insight and nodding, right away. This is the unusual experience of thinking yeah, that says it, I have thought bits of this, less articulately, and it seems pretty obvious once said, meaning the ideas are well-developed and clear and intuitively strong.

Why are super-profitable firms in finance not ground down to bankruptcy and obsolescence? There are myriad maneuvers but this book teases out the common patterns underneath, labeled "sabotage." Oh, and the economist being revived here is Thorstein Veblen, the school is the old institutional economics. (Off-topic: coincidentally, there is a fantastic exposition of new institutional economics in the recently released "Institutions, Institutional Change and Economic Performance" by Douglass C. North, I just now reviewed. Each of these books is brimming over with insight and quite listenable.)

In the first couple sentences, reading a list of acronyms, the narrator unfortunately fumbled a couple times, as in calling CDO "collateralized default obligation." I rolled my eyes and thought, is the book bad or the narrator? Thankfully neither is true -- the book is pretty good and the narrator is competent. I did not hear such errors recurring. Meanwhile, we get a tour of recent financial misbehavior, by some very well-placed players.

Why 3 stars? I changed this to 3 from 5 because, alongside the fresh takes on things, are some tried and true (and droningly familiar) ones. After a fresh take in the opening, it gets less original. It turns into a series of not-so-novel stories in the vein of criticisms of capitalism from Louis Brandeis, on down to Elizabeth Warren. These critics of the last century or so were/are bright people who understand a lot of nuts and bolts and important stuff, but in some nagging sense, IMO, "just don't get it." That is, we try things. Creative destruction happens. A more heavy-handed traffic cop cannot fix all issues, and past a point will bring staleness. Free folks can bet their own money freely on sketchy projects and the result is self-correcting: they lose their investment. The tone here becomes righteous and petulant, and after the books one idea is spilled (in the first 20 minutes) the usual financially elite suspects get the usual drubbing. The description for example of "junk bonds" and Michael Milken is so hard-edged and catty, and the grudging admissions of his innovations' possible virtues so nonexistent, that I feel the hot breath of a finger-wagging school-marm down my neck. It is all a little too anxious to simplistically yell "evil!" Good and bad guys! And the counter-arguments are not duly fleshed out. As is so common in our politics nowadays. Sadly. I suggest for a balanced view of modern finance one listen to the first half of "The End of Alchemy," a much more nuanced view. Even better fleshed out and multi-sided on the whole matter of finance-linked disruption is a recent release, "How Money Became Dangerous."

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