[PEN-L:11251] bingo

[Doug Henwood <dhenwood@xxxxxxxxx>]

Apologies if this seems too self-promotional.

Paul J. Isaac may "consider himself a Wall Streeter," as his i.d. line
says, but last I heard, he was unemployed because he lost piles of money
during one of the great bull markets in human history.

Doug

----

[from Barron's, July 14, 1997]

 Bullish on Bunk

  Wall Street: the book offers a skewed view of Wall Street
  the reality

  [thin rule]
  Edited by Jay Palmer

  Wall Street
  By Doug Henwood
  Verso, $22.50, 372pp

  REVIEWED by PAUL J. ISAAC

  [A] generation ago, a boomlet of radicals entered
  journalism. A surprising number gravitated toward covering
  business, often to expose the corruption and machinations at
  the heart of American society. Most soon discovered there
  were no secret cabals or overarching schemes for social
  domination. So their coverage moved toward the particular
  scandals, shortcomings or triumphs of the day. Many have
  since succumbed to the seductions of steady paychecks.

  Not so Doug Henwood, the middle-aged publisher of the Left
  Business Observer newsletter, and the host of a show on
  geo-politics on WBAI, a New York leftist radio station. Now
  Henwood has written Wall Street, a book that amply
  illustrates his nasty ad hominem streak and overweening
  intellectual arrogance.

  Both characteristics were also      [Wall Street Book Cover]
  central elements in Karl Marx's
  personality. One wonders whether Henwood acquired his
  repellent style through natural aptitude or exaggerated hero
  worship.

  Whatever the reason, Wall Street is predictable Henwood,
  with Marxist analysis of the U.S. capital markets. At the
  end, no surprise, shareholders and ``the creditor-rentier
  class of the First World and their junior partners in the
  Third'' are deemed irrelevant, parasitic and disposable,
  preferably via confisticatory taxation. ``Worker ownership''
  economies, based on non-market principles, should replace
  them.

  Reading loopy polemics like Wall Street should be fun.
  Regrettably, the book fails to deliver.

  The first two of its seven sections constitute 107
  descriptive pages on U.S. financial markets, products and
  participants. A lot to squeeze in while gratuitously flaying
  ideological opponents and showing how expensive and
  needlessly complex is the U.S financial system. Henwood
  ignores the plethora of specialized services and
  intermediaries that have grown up around most industries,
  not just finance.

  Henwood's substantive complaints about aggregate
  financial-transaction expense, excessive turnover,
  asset-pricing models and leveraged buyouts echo longstanding
  critiques by, among others, Louis Lowenstein of Columbia
  University and Warren Buffett.

  Similarly, in his next section, Henwood devotes eight pages
  to a description of ``a trading week'' complete with
  ``reflexive-like relationships among financial phenomena,
  the whole strongly reminiscent of the ``Real Time
  Experiment'' in George Soros's The Alchemy of Finance.

  Then we're off on a lengthy trek debunking current theories
  of finance, during which Henwood really bogs down in the
  fever swamps of lengthy paeans to Marx's visionary genius,
  magisterial corrections of other Marxist economists, plus
  occasional odd digressions, such as bashing Rudolf
  Hilferding, a Social Democratic finance minister during the
  Weimar Republic.

  Despite 300-plus pages of excoriation, Henwood's disdain for
  capitalism remains unconvincing. His criticism of American
  society as atomistic is ironic, given the civic void exposed
  in socialist states when their totalitarian systems
  collapse. In addition, while Henwood is at his best and most
  provocative doing street theater on the cost, waste and
  pretensions of American financial markets, someone in the
  U.S. must be doing something right. The U.S. saves 5%-10%
  less of GDP than other developed countries. Yet starting
  from the world's highest standard of living, America
  maintained broadly comparable economic growth despite a
  lower savings effort. Perhaps the U.S. capital markets,
  whose aggregate costs are under 1% of GDP, contribute to
  that success.

  And high turnover rates in securities markets may be
  wasteful, but they pale into insignificance compared with
  the useless accumulation of industrial junk and gargantuan
  deferred environmental costs that socialism begat in the
  former U.S.S.R., Eastern Europe and China.

  Henwood calls tight money, anti-inflation policies in
  capitalist countries ``sadomonetarism,'' with former Fed
  chief Paul Volcker's tightening in the early 'Eighties as
  the prototype. Yet a 5% peak-to-trough drop in GDP seems
  weak beer, compared to deliberately starving millions and
  seizing agricultural ``surpluses'' for industrial
  development as the Soviet Union did in the early 'Thirties
  or China did during the Great Leap Forward.

  Antagonistic to economic modernity and paternalistic toward
  ``workers,'' Wall Street plants itself among those who would
  welcome the collapse of American prosperity. If the economy
  turns down sharply, boning up on Henwood will help explain
  the inspiration for the blizzard of economic regulation
  initiatives that probably will follow. Until that day
  arrives, however, save your $22.50.

  PAUL J. ISAAC considers himself a Wall Streeter.