Smart Money : How High-Stakes Financial Innovation Is Reshaping Our World--For the Better
Overview - Seven years after the financial crisis of 2008, financiers remain villains in the public mind. Most Americans believe that their irresponsible actions and complex financial products wrecked the economy and destroyed people's savings, and that bankers never adequately paid for their crimes. Read more...
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More About Smart Money by Andrew Palmer
Seven years after the financial crisis of 2008, financiers remain villains in the public mind. Most Americans believe that their irresponsible actions and complex financial products wrecked the economy and destroyed people's savings, and that bankers never adequately paid for their crimes.
But as Economist
journalist Andrew Palmer argues in Smart Money
, this much maligned industry is not only capable of doing great good for society, but offers the most powerful means we have for solving some of our most intractable social problems. From Babylon to the present, the history of finance has always been one of powerful innovation. Now a new generation of financial entrepreneurs is working to revive this tradition of useful innovation, and Palmer shows why we need their ideas today more than ever.
Traveling to the centers of finance across the world, Palmer introduces us to peer-to-peer lenders who are financing entrepreneurs the big banks won't bet on, creating opportunities where none existed. He explores the world of social-impact bonds, which fund programs for the impoverished and homeless, simultaneously easing the burden on national governments and producing better results. And he explores the idea of human-capital contracts, whereby investors fund the educations of cash-strapped young people in return for a percentage of their future earnings.
In this far-ranging tour of the extraordinarily creative financial ideas of today and of the future, Smart Money
offers an inspiring look at the new era of financial innovation that promises to benefit us all.
Publishers Weekly Reviews
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As official national villain, Wall Street has recently been supplanted by other malefactors (such as the CIA, local police forces, and Ebola), yet the Great Recession has undeniably left finance with a tarnished reputation. Economist journalist Palmer hopes to burnish its image in this eloquent manifesto, highlighting current innovations in finance that promote social good. Wisely, Palmer begins by admitting Wall Street’s recent sins: namely, disastrously miscalculating the risks of subprime mortgages and triggering the global financial crisis of 2007–2008. Yet, as he observes, financial crises are nothing new, dating back to 33 C.E. Palmer argues that a world without finance (and thus without loans, credit, insurance, or investments) would be far worse. He points to how the Internet now allows individuals to bypass conventional financing, gives borrowers access to lower interest rates, and lets entrepreneurs obtain capital via crowdfunding. He also discusses social-impact bonds, wherein nonprofit organizations that, say, reduce recidivism pay off investors using the money saved by the government. Palmer responsibly notes the potential risks of such brave new innovations, spotlighting a not-so-novel innovation, catastrophe modeling for insurers, which could also be valuable, specifically for modeling risk in markets. This intelligent, balanced study of current innovations in finance does much to exorcise its recent demonization. Agent: Andrew Stuart, Stuart Agency. (Apr.)