25 May 2012

A Critique of Gambling with Borrowed Chips

In The Federal Lawyer, the monthly FBA publication, Jane Gravelle of the Congressional Research Service has written a critique of my recent book on the financial crisis of 2007-08, Gambling with Borrowed Chips.

Here is a link to the book.

Here is a link to the review section of The Federal Lawyer for June. Gravelle’s review begins at p. 3 of that pdf.  If you are reading this after that link has lapsed, try here instead.

As you will see at either site, Gravelle had some kind words about my book as “readable and entertaining.” She enjoyed the historical material, and appreciated my explanations of “a lot of concepts and practices.” So if my book is ever re-issued with a dust jacket, we may be able with judicious editing to mine this review for blurbs.

She spends most of her review arguing with my book though: arguing in particular that my analysis of the cause of the crisis, and my prescriptions for avoiding its like in the future, are thoroughly misguided. Thus, she has my gratitude for giving me a wonderful excuse for discussing that analysis and those prescriptions further, and I will take advantage of the same in a series of posts you’ll be able to read right here next week.

For now, though, I’ll limit myself to an observation about the kind of book this is. Gravelle writes, “Gambling with Borrowed Chips is not a scholarly work, in that it has no references or footnotes.”  

Yes, it is true that I did not use the usual scholarly apparatus of footnotes and bibliography. This isn’t because I am unfamiliar or disrespectful of that apparatus. I have employed it in earlier books, and may well employ it again if I give this particular argument the fuller work-up I believe it deserves. Still … this book was but a précis for some later complete scholarly study, and a précis that might indeed attract readers who are put off my small-print notes and lengthy lists of references.
The text itself does contain references to the works on which I depend, more-or-less explicit or allusive, it is true. Barney Frank’s great whistling-past-the-graveyard quotation, "There’s no immediate crisis,” may be found in The Washington Post for September 7, 2008, for example, as my book clearly indicates.
As to scholarly works, in my chapter “Sound Money” I allude to the work of economic-historian Robert Higgs on the unusual length of the Great Depression and the economic consequences of the Second World War. I also cite no less of an authority than Ludwig von Mises on the aftermath of the Bretton Woods monetary conference.
My own credentials are not those of an academic economist (or economic historian).  They are those of a reporter whose beat it has been for many years now to cover the world of finance, first at HedgeWorld (2000 to 2008) and more recently at The Hedge Fund Law Report and as the proprietor of Enfield Editorial Service. I believe this has been as valuable a perch whence to observe and learn as any other I could have occupied through the key period.  
That will do for the kind of book, and the kind of author, involved. Next week, we shall get to the substantive issues between Gravelle and your humble servant.

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Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.