Other People's Money

Prologue: The Parable of the Ox p. xi

Introduction: Far Too Much of a Good Thing p. 1

Prologue: The Parable of the Ox p. xi

Introduction: Far Too Much of a Good Thing p. 1

Part I Financialisation

Chapter 1 History p. 11

The Road to Pottersville p. 11

The Rise of the Trader p. 16

New Markets, New Businesses p. 23

From Crisis to Crisis p. 34

The Robber Barons p. 42

We Are the 1 Per Cent p. 46

Chapter 2 Risk p. 53

Cows, Coffee and Credit Default Swaps p. 53

Chasing the Dream p. 61

Adverse Selection and Moral Hazard p. 69

Chapter 3 Intermediation p. 77

The Role of the Middleman p. 77

Liquidity p. 84

Diversification p. 91

Leverage p. 95

Chapter 4 Profits p. 101

Smarter People p. 101

Competition p. 106

The Edge p. 108

Regulatory Arbitrage p. 113

I'll Be Gone, You'll Be Gone p. 118

How Profitable is the Finance Sector? p. 126

Part II The Functions of Finance

Chapter 5 Capital Allocation p. 135

Physical Assets p. 135

Housing p. 140

Property and Infrastructure p. 145

Large Companies p. 150

Financing Small- and Medium-Size Enterprises p. 154

Chapter 6 The Deposit Channel p. 163

Household Wealth p. 163

The Payment System p. 170

The Activities of the Deposit Channel p. 177

Chapter 7 The Investment Channel p. 185

Managing Wealth p. 185

A Bias to Action p. 193

The Role of the Asset Manager p. 197

Part III Policy

Chapter 8 Regulation p. 205

The Origins of Financial Regulation p. 205

The Basel Agreements p. 208

Securities Regulation p. 213

The Regulation Industry p. 216

What Went Wrong p. 220

Chapter 9 Economic Policy p. 227

Maestro p. 227

Financial Markets and Economic Policy p. 234

Pensions and Inter-Generational Equity p. 238

Consumer Protection p. 245

The Economic Contribution of Finance p. 247

Chapter 10 Reform p. 255

Principles of Reform p. 255

Robust Systems and Complex Structures p. 261

Other People's Money p. 267

The Reform of Structure p. 270

Personal Responsibility p. 276

Chapter 11 The Future of Finance p. 281

Epilogue: The Emperor's Guard's New Clothes p. 293

Acknowledgements p. 295

Notes p. 297

Bibliography p. 311

Index p. 321