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Wall Street: How It Works and for Whom
A scathing dissection of the wheeling and dealing in the world’s greatest financial center. Spot rates, zero coupons, blue chips, futures, options on futures, indexes, options on indexes. The vocabulary of a financial market can seem arcane, even impenetrable. Yet despite its opacity, financial news and comment is ubiquitous. Major national newspapers devote pages of newsprint to the financial sector and television news invariably features a visit to the market for the latest prices. Does this prodigious flow of information have significance for anyone except the tiny percentage of people who have significant holdings of stocks or bonds? And if it does, can non-specialists ever hope to understand what the markets are up to? To these questions Wall Street answers an emphatic yes. Its author Doug Henwood is a notorious scourge of the stock exchange in the pages of his acerbic publication Left Business Observer. The Newsletter has received wide acclamation from J.K. Galbraith, among others, and occasional less favorable comment. Norman Pearlstine, then executive editor of the Wall Street Journal, lamented, ‘You are scum ... it’s tragic that you exist.’ With compelling clarity, Henwood dissects the world’s greatest financial center, laying open the intricacies of how, and for whom, the market works. The Wall Street which emerges is not a pretty sight. Hidden from public view, the markets are poorly regulated, badly managed, chronically myopic and often corrupt. And though, as Henwood reveals, their activity contributes almost nothing to the real economy where goods are made and jobs created, they nevertheless wield enormous power. With over a trillion dollars a day crossing the wires between the world’s banks, Wall Street and its sister financial centers don’t just influence government, effectively they are the government.
382 pages, Paperback
First published June 1, 1997
23 people are currently reading
878 people want to read
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Displaying 1 - 26 of 26 reviews
September 26, 2019
This is a tough book for me to review because while I wanted to understand finance from a critical left point of view and I enjoy Doug Henwood's writing, the actual workings of finance and financial theory I find painfully tedious. So I ultimately felt like I got the general nature of the critique that the financial industry exists to serve the ruling class and make the rich richer, which was valuable and I did appreciate the explanation of why that is and the way he exposes the financial industry's bullshit. But I did stop reading around halfway through because I'm just not that interested in the details and wanted to move on with my life.
December 14, 2022
Some of you like my reviews so I assume that means that you value my perspective, at least a little. It's important to be honest if you want to be taken seriously, so I have a confession to make: I didn't really know what a stock or a bond was before this book.
A remarkably clear description of the financial forces that run our lives. Henwood is a Marxist, but he's surprisingly unpolemical here - although his distaste for Wall Street is clear (look at the cover) and he gets ironic digs in from time to time, he's more interested in explaining how the thing functions. We know it's bad. But why?
It took me awhile to get through. I've struggled lately to get through books about economics. I treat it like eating vegetables - and not the good kind either, I'm talking frozen cauliflower steamed in a microwave. You gotta do it, and in the long run you'll feel better, but boy can it be a chore.
A remarkably clear description of the financial forces that run our lives. Henwood is a Marxist, but he's surprisingly unpolemical here - although his distaste for Wall Street is clear (look at the cover) and he gets ironic digs in from time to time, he's more interested in explaining how the thing functions. We know it's bad. But why?
It took me awhile to get through. I've struggled lately to get through books about economics. I treat it like eating vegetables - and not the good kind either, I'm talking frozen cauliflower steamed in a microwave. You gotta do it, and in the long run you'll feel better, but boy can it be a chore.
March 27, 2016
Very good. Worth the price of admission for Chapter 5 alone, which is a mini-macroeconomics textbook both more true to the spirit of Keynes than most high school textbooks and more readable than the actual Keynes of the General Theory. Dense and data-heavy in the same way Piketty is, but with a bolder, and I think better, perspective. Recommended if you're into this sort of thing.
October 27, 2008
A really stellar book -- it can be download for free here:
http://www.wallstreetthebook.com/
His more recent book is also a fine one: After the New Economy
http://www.wallstreetthebook.com/
His more recent book is also a fine one: After the New Economy
April 22, 2012
really good. it's refreshing to read someone citing keynes sceptically, and it's a hoot to read about microloans and "local" banking in a book written in the mid nineties, when in 2012 these things are dumb fads all over again.
his suggestions, near the end of the book, are also really good in that they're practical even if they are politically inconceivable. wealth taxes, public spending, increasing friction for financial instruments with fees and capital controls, taking resources out of the market entirely (his community land trusts example), etc. normally people just say "kick the parasites out" which is ok but not really that productive. sort of like smashing a machine because you don't understand how it works instead of using it for a different purpose.
plus its free, and the math isnt too hard. you have no excuse now. I cant wait to read his book on the end of the 'new economy', although after reading wall street I'm not sure what about it he would need to correct or change to account for the bursting of the dotcom (or the housing) bubbles, since some parts of the book read as if they were written in the middle of the TARP era.
his suggestions, near the end of the book, are also really good in that they're practical even if they are politically inconceivable. wealth taxes, public spending, increasing friction for financial instruments with fees and capital controls, taking resources out of the market entirely (his community land trusts example), etc. normally people just say "kick the parasites out" which is ok but not really that productive. sort of like smashing a machine because you don't understand how it works instead of using it for a different purpose.
plus its free, and the math isnt too hard. you have no excuse now. I cant wait to read his book on the end of the 'new economy', although after reading wall street I'm not sure what about it he would need to correct or change to account for the bursting of the dotcom (or the housing) bubbles, since some parts of the book read as if they were written in the middle of the TARP era.
May 12, 2013
Although it was written a decade plus ago, this is the best, most readable, account of the guts of our financial system I'm aware of. The solutions to the massive problems laid out in the book are a tad bit slim, and you are assumed to be somewhat familiar with basic economic lingo. (It is currently out of print, but offered for free online. A simple google search will locate it.)
Want to read
January 31, 2023HG4572 H45 1998 Business library
February 18, 2012
I started reading this book because I've been reading some left-leaning econ bloggers (Josh Mason, Mike Konczal) and ran across mention of Henwood and this book a few times.
Make no mistake, "Wall Street" is a hard-left leaning book. It was definitely an interesting read, especially because it was written in the mid-90s. I give DH a lot of credit: today, it's relatively acceptable to argue that the financial system does not allocate capital optimally, since the wreckage is staring us in the face; in the mid-90s, during the early boom years of the New Economy, it certainly took a lot more courage. I also give DH credit for being into Hyman Minsky before it was cool to be into Hyman Minsky.
The most interesting part of this book for me was its discussion of the economic and societal role of the stock market. Econ 101 tells us that the function of the stock market is to allocate capital to real-economy enterprises. DH (along with Mason and others) argues that this is not really the case, that firms empirically fund most capital investment out of internal funds, and that stock markets mainly serve as a source of liquidity for existing owners of capital. Although DH is making his argument in a journalistic style and not a rigorous academic form, this view is certainly supported by the recent IPO plans of Groupon, LinkedIn, and Facebook, which all have publicly stated that they do not need the cash but would like to give their existing equity holders a liquid market that they can use to mark the value of their holdings or to exit. This function is still, of course, related to capital allocation, just like an exhaust system affects the performance of a car engine, but the connection may be much less direct than the Econ 101 picture would lead us to believe. Also, in a world with Shleifer-Vishny limits to arbitrage, we may only be able to hold the weak efficient markets hypothesis (or what Rajiv Sethi prefers to call the Invincible Markets Hypothesis), which says that it's impossible to beat the market, but not that the market correctly values real-world assets--meaning that it may not be an efficient allocator of capital even when used as such. (If you don't agree, there is a subdivision in Nevada that I'd like to sell you.)
Another thing that DH highlights is the extreme concentration of the holdings of financial assets in the top of the income/wealth distribution. Oftentimes, policies that benefit holders of financial assets are promoted using the argument that "Hey, almost everyone owns some stock." While that may be true, the reality is that the vast inequality in holdings means that any policy supporting financial assets has an extremely regressive impact.
All that said, I didn't love the book. DH is often too facile with his examples--for instance, holding up Japanese keiretsu as an example of more equitable economic organization (is a cartel really better for the little guy?). There is also a fairly long Freudian digression which I found completely bizarre and off-putting.
Make no mistake, "Wall Street" is a hard-left leaning book. It was definitely an interesting read, especially because it was written in the mid-90s. I give DH a lot of credit: today, it's relatively acceptable to argue that the financial system does not allocate capital optimally, since the wreckage is staring us in the face; in the mid-90s, during the early boom years of the New Economy, it certainly took a lot more courage. I also give DH credit for being into Hyman Minsky before it was cool to be into Hyman Minsky.
The most interesting part of this book for me was its discussion of the economic and societal role of the stock market. Econ 101 tells us that the function of the stock market is to allocate capital to real-economy enterprises. DH (along with Mason and others) argues that this is not really the case, that firms empirically fund most capital investment out of internal funds, and that stock markets mainly serve as a source of liquidity for existing owners of capital. Although DH is making his argument in a journalistic style and not a rigorous academic form, this view is certainly supported by the recent IPO plans of Groupon, LinkedIn, and Facebook, which all have publicly stated that they do not need the cash but would like to give their existing equity holders a liquid market that they can use to mark the value of their holdings or to exit. This function is still, of course, related to capital allocation, just like an exhaust system affects the performance of a car engine, but the connection may be much less direct than the Econ 101 picture would lead us to believe. Also, in a world with Shleifer-Vishny limits to arbitrage, we may only be able to hold the weak efficient markets hypothesis (or what Rajiv Sethi prefers to call the Invincible Markets Hypothesis), which says that it's impossible to beat the market, but not that the market correctly values real-world assets--meaning that it may not be an efficient allocator of capital even when used as such. (If you don't agree, there is a subdivision in Nevada that I'd like to sell you.)
Another thing that DH highlights is the extreme concentration of the holdings of financial assets in the top of the income/wealth distribution. Oftentimes, policies that benefit holders of financial assets are promoted using the argument that "Hey, almost everyone owns some stock." While that may be true, the reality is that the vast inequality in holdings means that any policy supporting financial assets has an extremely regressive impact.
All that said, I didn't love the book. DH is often too facile with his examples--for instance, holding up Japanese keiretsu as an example of more equitable economic organization (is a cartel really better for the little guy?). There is also a fairly long Freudian digression which I found completely bizarre and off-putting.
December 2, 2012
As the title indicates, this book is an introduction to Wall Street - how it works and for whom. The book is composed of seven chapters as follows:
1- Instruments: This chapter covers the range of instruments traded on Wall Street, such as stocks, bonds, derivatives, currencies etc.
2- Players: This chapter covers the main stakeholders including households, nonfinancial business, financial institutions, the government etc.
3- Ensemble: This chapter discusses how the markets are intertwined, with a focus on credit, finance and the economy, allocation etc. It also includes a sample trading week to put these concepts into action.
4- Market Models: This chapter presents the numerous financial models that have been devised to simulate the market. It also discusses features of these markets, namely efficiency, disinformation, noise, fads, and bubbles.
5- Renegades: This chapter discusses in detail the Keynesian view of the markets, as well as those of Marx.
6- Governance: This chapter is about Corporate Governance, with a section on the relation of Wall Street and the government.
7- What is (not) to be done?: This last chapter includes the author's thoughts on a number of economic issues such as social security, the Fed, investing socially, taxation, corporate transformation.
The breadth of topics discussed within this book is commendable, backed by a plethora of references for further reading in areas of interest. Chapters 1 and 2, serve as a great introduction and primer on the financial markets. The insight, stories and practical example presented make this book accessible. A final, and important comment to keep in mind, is that the author presents the content of the book (particularly the later chapters) from a leftist perspective.
1- Instruments: This chapter covers the range of instruments traded on Wall Street, such as stocks, bonds, derivatives, currencies etc.
2- Players: This chapter covers the main stakeholders including households, nonfinancial business, financial institutions, the government etc.
3- Ensemble: This chapter discusses how the markets are intertwined, with a focus on credit, finance and the economy, allocation etc. It also includes a sample trading week to put these concepts into action.
4- Market Models: This chapter presents the numerous financial models that have been devised to simulate the market. It also discusses features of these markets, namely efficiency, disinformation, noise, fads, and bubbles.
5- Renegades: This chapter discusses in detail the Keynesian view of the markets, as well as those of Marx.
6- Governance: This chapter is about Corporate Governance, with a section on the relation of Wall Street and the government.
7- What is (not) to be done?: This last chapter includes the author's thoughts on a number of economic issues such as social security, the Fed, investing socially, taxation, corporate transformation.
The breadth of topics discussed within this book is commendable, backed by a plethora of references for further reading in areas of interest. Chapters 1 and 2, serve as a great introduction and primer on the financial markets. The insight, stories and practical example presented make this book accessible. A final, and important comment to keep in mind, is that the author presents the content of the book (particularly the later chapters) from a leftist perspective.
December 10, 2007
This is probably the best book I've ever read about economics and you get it for free here: http://www.leftbusinessobserver.com/W...
It's right up there with Anarcho-Syndicalism and Notes on Anarchism.
The most interesting thing about this book is his explanation that there is a major divide in the ruling class between managers and rich families. I always thought they were in it together to screw over the bottom 99%. Managers/companies want a high-growth, inflationary economy (that is generally better for workers, unions, and wages) and rich families want to severely limit economic growth because they a ton of money invested in bonds, which lose value if there's high inflation. Basically, if you have a ton of money, you are pitted against economic growth. The needs of the bond markets (long-term investments that are weakened by inflation) have determined our low-growth economic policies and limited possibilities for unionization and economic equality in the U.S.
Another idea that is fascinating in this book is that the major banks and economists in the US are completely OBSESSED with unionizing rates. As soon as the labor market gets tight and unions make gains, the banks tighten up the money supply and stop economic growth. They'd rather grind the economy to a halt then share the wealth and power with the workers who generate it. They are absolutely terrified of workers joining together and fighting for unions.
A fascinating read.
It's right up there with Anarcho-Syndicalism and Notes on Anarchism.
The most interesting thing about this book is his explanation that there is a major divide in the ruling class between managers and rich families. I always thought they were in it together to screw over the bottom 99%. Managers/companies want a high-growth, inflationary economy (that is generally better for workers, unions, and wages) and rich families want to severely limit economic growth because they a ton of money invested in bonds, which lose value if there's high inflation. Basically, if you have a ton of money, you are pitted against economic growth. The needs of the bond markets (long-term investments that are weakened by inflation) have determined our low-growth economic policies and limited possibilities for unionization and economic equality in the U.S.
Another idea that is fascinating in this book is that the major banks and economists in the US are completely OBSESSED with unionizing rates. As soon as the labor market gets tight and unions make gains, the banks tighten up the money supply and stop economic growth. They'd rather grind the economy to a halt then share the wealth and power with the workers who generate it. They are absolutely terrified of workers joining together and fighting for unions.
A fascinating read.
January 6, 2008
This is a really good book if you want to understand how the financial system works in the U.S. (and by extension the world). As far as I know it's still the best, even a decade after its publication. Definitely comes with a left bias, but it's not just muckraking -- Henwood has mastered an extremely confusing subject and made it halfway intelligible to the layperson. Be advised that this book is long and complicated (not a fault of the writing). The good news is you can get it for free online. If you're curious I'd recommend reading the introduction and chapter 2 (players). If you want a critique of your college econ classes, read chapter 4 (market models), polisci check out 6 (governance). And if you know a bit of marx and/or keynes, read chapter 5 (renegades).
If you're in a position of influence, read the whole thing! Please!
If you're in a position of influence, read the whole thing! Please!
July 16, 2015
best book about Wall Street
You know, that guy Michael Lewis writes these flash books about flash trading and other Wall Street phenomena, but none of them gave me the foundation for my judgment on the place that this book did, that it is a zero sum game, that the money does not go into capital improvements, that it is a great big cash re-distributor that favors the biggest players. Detailed, objective, straightforward, this book is the best book about Wall Street, in its entirety, that someone who is just looking into what the world of high finance is about should just go out and read.
You know, that guy Michael Lewis writes these flash books about flash trading and other Wall Street phenomena, but none of them gave me the foundation for my judgment on the place that this book did, that it is a zero sum game, that the money does not go into capital improvements, that it is a great big cash re-distributor that favors the biggest players. Detailed, objective, straightforward, this book is the best book about Wall Street, in its entirety, that someone who is just looking into what the world of high finance is about should just go out and read.
June 19, 2016
This is a very good book in macro and microeconomics. I was quite happy with the results. The author has a very careful to address the uninitiated so that readers can expect a great deal of repetitive content. However, it gives a larger view of what wall street is and how it operates. Politically it leans left but I didn’t find it unreadable, au contraire: The politics are left to a minimum and the book and it seeks an objective view of all major stakeholders and what they do in Wall Street. Read if you are a beginner. 4 stars.
April 25, 2012
Quite simply the best book on the in's & the out's of America's financial industry available. Seriously, set aside those GQ & Rolling Stone puff pieces, and get to the read deal. You can download it for free here.
April 14, 2023
A Modern classic. Very little can be said to have changed since its publication and it is by far one if the best straight forward analyses of the machinations of our economic system. You will definitely come out of it with a clearer knowledge of how things work. Can't recommend it enough.
July 28, 2012
Unbelievably prescient. Written in 1996, this book diagnoses the 2008 crisis, its causes, symptoms, and consequences.
January 30, 2023
Because financial capitalism is responsible for a lot of awful things, it's really easy for people inclined toward the left to reflexively reject the whole shebang and its institutions. That's misguided, Henwood writes; instead, since this thing has proven itself unfortunately durable, we should approach it as a thing worth studying and understanding. And so he wrote a book to do just that—explain the various components of finance (from EBIDTA and equity to LBOs and money markets) from a distance neither infatuated (as is the case with basically every other book about finance out there) nor polemic. It's really valuable! I can't understand why it wasn't reprinted and updated in the 2000s. Finance and financial capitalism runs our lives; the least we can do for ourselves is understand it more thoroughly.
September 23, 2023
I'll be the first to admit, reading this book took me longer to read than my following comments would suggest: this book is a great read. It crackles with insightful analysis, bristles with wit, and has the savour of a resentful insider's acerbic humour. Henwood does a very good job introducing and analysing the evergreen fundamentals of financial markets and their role in American and international capitalism. He engages fairly deeply and accessibly with the foundational economic literature, and offers up insights from within the world of Wall Street, while never flinching from ravaging the social realities of the economic theories (read:self-justifications) which underpin financial trading and banking.
An excellent book.
An excellent book.
February 22, 2018
A bit hard to read and not too actionable
June 8, 2021
While the data are now substantially outdated, the concepts and opinions are still presently relevant.
abandoned
October 25, 2021Enjoyable, but fairly out of date. I never seem to get through these economics tomes anymore.
November 12, 2024
Be patient with the book. It picks up the pace as late as chapter 5 and the patient readers will be duly rewarded.
August 17, 2007
This book is about the inner workings of economics, from a left wing perspective. Interesting in parts, overly minute in others. Once you get his point that the financial system is smoke and mirrors designed and implemented to protect wealth, the only point in continuing is for all the gritty details. I quit not quite halfway through, but that's says more about me than it does Henwood's book.
Want to read
October 11, 2009Get it for free: http://www.leftbusinessobserver.com/W...
June 29, 2013
Brilliant must-read.
June 28, 2013
Good undergraduate-level overview of the academic literature on Wall Street and the financial services industry.
Displaying 1 - 26 of 26 reviews