Wall Street: How It Works and for Whom by Doug Henwood

Product Description

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.
Product Details
Amazon Sales Rank: #436245 in Books
Published on: 1998-05
Number of items: 1
Binding: Paperback
372 pages
Editorial Reviews

From Library Journal
In this "down and dirty" diatribe about American finance, journalist and New York radio personality Henwood makes no attempt at a balanced portrayal of Wall Street. He aims to "embarrass official wisdom" and expose the financial world's weaknesses, perhaps too gloatingly. Intemperate phrasing abounds, e.g., "real estate is based on milking wealth from land and tenants." Admittedly, Henwood flails at both the Left and the Right, and he doesn't hide his biases, but he lovingly quotes Keynes and Marx a little too often. Henwood doesn't claim to be offering any practical investment advice; nor does he present any solutions to the problems against which he fulminates. The result is a difficult, divisive, unpleasant, querulous, and uninstructive book that larger business collections might tolerate.?Alexander Wenner, Indiana Univ. Lib., Bloomington
Copyright 1997 Reed Business Information, Inc.

James Grant, author of The Trouble with Prosperity
If Karl Marx wrote as well as Doug Henwood, who knows what course history might have taken?

Eric Foner, author of The Story of American Freedom
Indispensable to anyone who wants to know where our economy is, where it is going, and why."
Customer Reviews

Ten Years Later
Ten years have passed since the publication of Henwood's paperback edition. In economic terms, that's an eon, so why bother in 2008 with a 10-year old book, given all that's happened financially in the meantime. Mainly, I wanted insight into how Wall St. really works. For a layperson such as myself, the lexicon and mechanics of the stock market are as untranslateable and arcane as the Runic alphabet. However, I didn't want one of those texts that uncritically repeats the official version every time a probing question appears-- you know, about how the market sends investment signals while directing funds into the most promising sectors of production. Sounds good, but I've been around long enough to separate theory from reality and recognize a self-serving statement when I see one.

So I picked up Henwood's tome for two reasons: the first three chapters define the basic lexicon and mechanics of the market, while the remainder presents contrasting points of view on how the markets really function. Sure, in the latter context, Henwood has positive things to say about capital's arch-enemy Marx, but considering how wealth is actually distributed-- or more accurately, not distributed-- Marx deserves a hearing, along with other critics, notably Keynes. How ironic that we as a culture are so quick to blame Marxist theory for its practical failings, but refuse to blame official capitalist theory for its 300 years of gross inequality and trickle-down. But then, I guess that's the function of apologetics, which among other benefits does offer the "exogenous" ready employment.

The first three chapters worked pretty well for me. I'm somewhat more conversant about "derivatives", "calls", "puts" and the rest. But I would advise other interested neophytes to pay attention in those boring highschool or college classes that really teach at the elementary level because Henwood does assume a certain level of sophistication in those explanatory opening chapters. Then too, the text is interlarded with refinements of one sort or another, e.g. "q-ratio", that may illuminate at a more advanced level, but nonetheless, cloud the explanatory level. But what there is of a disparity probably lies more with my hopes rather than with Henwood's exposition.

The discussion section, particularly the chapter on "renegades", is itself worth the purchase price. Both there and in the succeeding chapter, Henwood presents data and theory showing why and how Wall St. diverges from the official version of the securities markets. There's plenty here to mull over, and I agree with the reviewer who said the book should be required reading at business schools (fat chance!). The value of these heterodox perspectives remains as important now as 10 years ago, given the current crisis in the derivitives markets and its capacity to bleed through the entire financial system. In that key sense-- i.e. as deeper background to recent developments-- the book, I'm happy to say, hasn't dated at all.

Needs an Editor
Journalist Doug Henwood has produced an interesting book on U.S. financial markets. Written from a left-wing point of view, Henwood contends that these markets do not raise capital for new investments or improve corporate governance. Instead, he argues that their primary function is to enable manic corporate restructurings that accomplish little besides shifting additional wealth to rentiers who already have plenty of it. Henwood relies mainly on the research of others.

The good news about "Wall Street" is that Henwood is witty and iconoclastic. The bad news is that having these traits doesn't mean that he can put together a good book. His bloated and repetitive text mixes statistics, polemics, anecdotes, biz school research, and potted discussions of Keynes, Marx and Minsky (and Freud!). The mish-mash of data definitely informs and entertains the reader (hence my rating of 4 stars) but never systematically establishes Henwood's core thesis about the parasitism of Wall Street. The book is worth reading but mainly for readers with a background in finance or economics who can separate the wheat from the chaff.

The Truth
First a word about the publishing house: Verso Publishing is probably the finest publishing house in the world. When in a bind simply pick up any one of their titles and one cannot go wrong. It's imperative to read at least a few of their books at least once.

Henwood's "Wall Street" blows the lid off high finance like few other works. It's the definitive critical analysis (along with some of William Greider's books) of the high circles of wealthy investors.

Throughout "Wall Street" it rips apart the Federal Reserve Board and exposes its gritty innards. Henwood demonstrates that the Fed is an undemocratic institution that's obsessed with any hints of labor militancy, its biggest fear being wage inflation.

The Monetary School is also dissected by Henwood, being exposed as the fraudulent theory it truly is (or clever ruling class idealogy). He points out that the Monetarist's ostensibly blamed the federal government for the Great Depression. Of course this has the fascinating effect of letting capitalism completely off the hook. The concepts of over productivity and income polarization, which were the defining characteristics of the 1920s, are rarely to be found in their school of thought.

Constant pressure by Wall Street for ever higher stock prices is what spurred most of the downsizing during the last decade according to Henwood. He smartly points out that this pressure for quick profit growth can often squelch research and development and investment projects which would benefit society. Because shareholders may very well deem these projects irrelevant to short-term profit growth.

Underlying "Wall Street" throughout Henwood continually pays homage to Karl Marx and some of his incredibly accurate predictions. He also demolishes old shibboleths such as the well worn canard that higher wages automatically translate into reduced employment opportunities, or that rising stock prices always mean a rosy economic picture for the general population. "Wall Street" proves that rising stock prices can often coincide with a poor economy for the masses.

Henwood documents the fraudulent work done by professional money managers who'd be better off throwing darts at a dart board than using their investment "skills" when making investment decisions for clients.

Some of the most important and informative sections deal with the rising consumer debt of the average American citizen. Being leveraged to the hilt, the family unit has basically been turned into a player in a giant Ponzi scheme. Capitalism in the United States desperately relies on credit-financed consumption to stay afloat.

Most books dealing with such an overarching topic give a paltry and dissatisfying "What is to be Done" final chapter. This isn't the case for "Wall Street." Henwood offers up many concrete and plausible solutions. Finally at one point asserting that an authentic financial transformation must be made along with an attack on capitalist social power in general.