Category: economy

This book was recommended by last employer CEO. It is based on the life of a stock trader Jesse Livermore from the early XX century.

One of the first shocking things in the book is in the introduction. This is a book about speculation.

That tells you a lot what was the market before, and what is today.

He made millions trading, lost them, recover, and at the end commit suicide. Still the book has good points for a trader point of view. I will never be a trader, because long term, very few, win.

I like his beginning in the trading world. He was very good at the bucket shops and he was forbidden to trade once he beat the house each time. Like in a casino.

One thing I realised about his trading in bucket shops is, his actions didn’t have impact in the market so it was a very reliable technique. But when he moved to the real market, he struggled. It is like the Schrodinger’s cat, until you dont trade, dont know if the stock is going to go up or down. And the other one, is the execution time. Low latency in those times were via telegraph lines, and they were critical. It is seems Western Union started in that business. If you have to buy many shares, very likely you will not buy all of them at the same price (it will go up, so it will be more expensive for you) and it will take some time. So for that period of execution, you are a bit at the mercy of the “market”.

There are many references to other early grate traders, scandals, crisis, etc. It was interesting how the American Civil War was financed by selling bonds to the European markets and then how during the WWI, all Europe gold came back to USA to finance all the arms needed for the war.

War is business. And then, they tell you is patriotic.

Another curious thing, is the trade of cane sugar. There was so much sugar that it was needed a market for it so it wouldn’t crash… then it was invented our “sugary breakfasts” and the chocolate bars!

At the end, I noticed that the whole trading experience could be repeated in our days without much difference. Maybe without the excess like the Wolf of Wall Stree movie/book.

I had this book in the pipeline. It is a bit technical but is interesting as it tries to provide data for several centuries about financial crisis. That is quite challenging not just because governments from middle age didn’t have much accountability but even nowadays the authors struggled getting hard number regarding domestic debt.

The book was written about the subprime crises in 2007-8 so that’s the main focus to proof that the event is not that different from other crisis. And it is remarkable how many crisis I have been through since 1980s without really noticing (but my parent sure they noticed…)

The book preface is super direct. The one common theme to most crisis is the excessive debt accumulation (governments, banks, corps, consumers). Even during a boom. So debt-fueled booms are not very healthy. And it was proved during the subprime that the financial markets dont correct themselves.

One of the most interesting points of the whole book is the evolution of default-prone countries (like France and Spain) to “stable” ones. This graduation process is long and hard, and not many pass the exam. As well, there are a lot figures about deb before 1929 crash, post WWII to put thing in perspective.

So it was interesting read mainly for the historic background and our psychological naivety during crisis times. At the end of the day, the economic is a cycle.

I finished reading this book from Paul Krugman. I have really enjoyed it. It is short book and got me hooked. And it is much more easier to read the Keynes book… that was proper hardcore. He explains the crisis we have seen in XIX and XX in a way that you dont need to be economist.

It is really interesting the connections of the economic crisis globally and how complex it is getting everything. It seems the only power that the governments have is print money and play with the interest rates. And it is clear that there is no a perfect system and we will carry on seeing crisis like this. There were some big figures in the economic world that said there will not be more macro economical crisis anymore. And it is funny how the IFM hasn’t followed the practices to improve economies from countries in crisis, they have made things worse.

The baby setting Co-Op is a great example that is used in several parts of the book so explain the type of crisis in that scenario. Really useful.

And seems he is honest, he doesnt have the explanations for all crisis. For example for the Asia crisis of the late 90s, he uses the psychological concept that investors put all countries is Asia in the same basket and treated some countries with stronger economies like weakest one.

And Keynes is mentioned several times. It is clear he was great (although I didnt understand much from his book).

It is clear that things that behave like a bank and they are not bank, they should play by the same rules to protect consumers and avoid crisis like the 2008.

And how important is the confidence. Even well run banks can go down extremely easy when there is a “run on the bank” (people want to take the money out of the bank). It is like a domino effect.

As in Mandelbrot book, it is impossible to foresee the economy long run… And Keynes says that in the long run we are dead.

Enjoy the moment.

I am reading The General Theory of Employment, Interest and Money of John Maynard Keynes. The intro is really good and give you a good glimpse of Keynes’ life. The book itself is quite hard for me to digest. It is not my field but I am courius about Economics/Finance. One day, I would like to understand how money really works…. I think I bought the book after references from other books from Yanis Varoufakis.

Things I have learned he was against the Treaty of Versailles as the conditions over Germany were too abusive and that could cause an economic disaster for future generations. Well, you have created the easiest scenario for a crazy guy to play with the feelings of a proud nation to raise and get back what it was theirs…. Yeah, very simplify, but it works in my head. He wrote about it in “Consequences of the Peace”.

I think we have seen similar scenarios (without war involved thanks x (x = choose your god’s religion)) with Greece and Argentina.

Then after WWII, he helped to create the “International Monetary Fund” and “World Bank”. And attended Bretton Woods Conference. One of the important points of that conference was the fix rate gold/dollar and the lack of banking crisis as a consequence of this agreement. As well, I think the book from “The Signal and the Noise” says that during this conference, the American president couldnt understand Keynes ideas as he couldnt explain them easily. That conference is important because when the deal was cancelled in 1971 it caused some interesting economic shocks (books from Varoufakis are good) as countries couldn’t change dollar/gold as before and the banking crisis started to roll.

As per my understaning, Keynes believed that economic balance (mainly low unemployment) was the basic of a peaceful world. If you have most of your needs satisfied, I dont think you will pick your rifle whenever a lunatic tells you to do so.

As well, he was pro-European…. look now, we are in Brexit times…

…look now… it seems unemployment is going to skyrocket all around the world…. and we have too many dumb presidents in too powerful countries…. look now… how far right has been gathering support in the last years….

All the ingredientes for the cocktel of W..