Confidence Games: Money and Markets in a World without Redemption (Religion and Postmodernism Series) | 
| Author: Mark C. Taylor
Publisher: University Of Chicago Press
Category: Book
List Price: $24.00
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Avg. Customer Rating:  3 reviews
Sales Rank: 359343
Media: Paperback
Number Of Items: 1
Pages: 416
Shipping Weight (lbs): 1.1
Dimensions (in): 8.6 x 5.6 x 1.1
ISBN: 0226791688
Dewey Decimal Number: 332
EAN: 9780226791685
ASIN: 0226791688
Publication Date: April 15, 2008
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Product Description
In Confidence Games, Mark C. Taylor posits that money and markets do not exist in a vacuum but grow in a profoundly cultural medium, reflecting and in turn shaping their world. Bringing John Calvin, G. W. F. Hegel, and Adam Smith to Wall Street by way of Las Vegas, Taylor first explores the historical and psychological origins of money, the importance of religious beliefs and practices for the emergence of markets, and the unexpected role of religion and art in the classical understanding of economics. He then moves to an account of economic developments during the past four decades, exploring the dawn of our new information age, the growing virtuality of money and markets, and the complexity of the networks by which monetary value is now negotiated. Returning full circle to a version of the market first proposed by Adam Smith, Confidence Games closes with a plea for a conception of life that embraces uncertainty and insecurity as signs of the openness and possibility of the future.
“It is a mark (sign might be a more apt term) of Taylor's continuing provocations, and illuminations of postmodern religion, art, and the economy, that this insightful and illuminating book raises so many far-reaching questions.”—Mark Valeri, Journal of the American Academy of Religion
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 Who Could Have Known? The Greatest Financial Crisis Since the Great Depression April 27, 2008
This is obviously, from the Title, a very contemporary review (April 27, 2008) of Mark Taylor's "Confidence Games," which was published in the fall of 2004. Since July of 2007, financial markets in the United States are going through the longest and most rattling crisis since the Great Depression, when measured by the extent of the mortgage crisis (10% of the mortgages are "upside down" - with projections of from another 10-20% to follow) and the degree and nature of interventions by the Federal Reserve and central banks in Europe. The collapse of the investment bank Bear Stearns in under a week (Wed. March 12th- Monday, March 17th, 2008) was the dramatic punctuation mark upon the shakiness and utter incomprehensibility of the new financial architecture both to the general public and the Beltway elite. It was a run against a major bank, but without the public lining up in the streets for withdrawals. Instead, the run occurred due to loss of confidence by unspecified major players operating in the spectral electronic spaces described so well in Taylor's book - years in advance. We are still waiting, the public and investigating Congress, to find out what really happened.
Today, as the press and public increasingly ask how this could have happened, even "wise men" such as Robert Rubin from the Clinton era "Committee to Save the World" are being questioned for their roles in and understanding of the still unfolding calamity.
This reviewer thinks it is important to credit those who, however far removed from mainstream press consideration, saw the dangers early and clearly in the brave new world of our financial markets, built between 1980 and the late 1990's, the era of de-regulation and free market worship - and idolatry. Now Taylor's book is breathtaking in it's scope and interdisciplinary reach, not easy reading, but given the breadth of what he covers, it deserves a much wider audience.
I direct readers' attention, in light of contemporary events, particularly to Chapter 5, entitled "Specters of Capital," just about 25 pages long, which should be required reading on Wall Street, in Congress, and in the world of journalists, such as they are, especially the ones who question and write about our presidential candidates.
Here is the essense of Taylor's findings on the fruits of decades of "financial engineering," or, as I like to call it, our "new financial architecture."
Page 152: "Contrary to expectation, the strategies and new financial instruments designed to avoid risk often end up creating greater volatility and thus actually increase risk."
Page 166: "Derivative investments are not only highly speculative but are also off-book, i.e., they do not show up on balance sheets. Moreover, derivatives are highly leveraged; in some cases they require little or sometimes even no capital up front. Throughout the 1990's, the derivatives market continued to grow until, in 1998, it had a nominal value of $70 trillion, eight times the annual Gross National Product of the United States." (Note: by 2008, the notional value is in the hundreds of trillions of dollars).
Pages 176-177: "With the attitudinal shifts about borrowing and debt and new government policies encouraging the creation of the new financial products computers and networks make possible, a collateral crisis became unavoidable...With Wall Street leveraged at 25:1 it might have seemed reasonable at least to extend margin rules to derivatives. But policies tended in the opposite direction. In his testimony before Congress in 1995, Alan Greenspan actually proposed completely eliminating all margin requirements....Indeed even the mortgage market changed in the 1990's. In their ongoing effort to make something out of nothing, financial engineers ended up transforming something into nothing; the ground virtually disappeared from beneath the real estate market. The securitization of mortgages through the creation of Mortgage Backed Securities and Collaterilized Mortgage Obligations led to pyramiding schemes in markets that once seemed secure."
On page 178 is a graphic of the Mortgage Market illustrating the layers and distance of investors from the actual real estate mortgages themselves - with collateral being used three times. Taylor, quoting author John Geanakoplos, nails the events of July 2007- to the present right on the head: "'Mortgage pass through securities offer a classical example of pyramiding. Pyramiding naturally gives rise to chain reactions, as a default by Mr. A ripples through, often all the way to D.'" (Page 179).
Just after this quote, Taylor comments: "At this point it becomes difficult to deny that the confidence game has become not only a casino but is actually a house of cards."
I don't think that much more needs to be said about whether our troubles could have been anticipated; they were and very clearly. This review writer knows that it was possible. He gave Taylor's book and warnings central "booking" in his own essay, "Fiscally Responsible, or Ingredients for an Economic Katrina?" The date? February, 2007.
William Neil
 Money & Markets from Diverse Perspectives April 7, 2005
12 out of 12 found this review helpful
What gives money its value? Are financial markets truly linked to the "real" world? Professor Mark Taylor, who has been praised as an "awe-inspiring theorist of everything," explores these and related issues in this interdisciplinary book. Taylor attempts to show the links between economics, financial markets, money, postmodernism, complexity theory, media, art and religion. It's quite an audacious task, and although one might debate if he was successful, Taylor takes the reader on a thrilling intellectual journey.
Taylor claims you can't study markets in isolation. Markets are embedded in society, so to fully understand them you must understand politics, culture, science, religion, sociology, and psychology. To do so, Taylor takes us on a tour of not only various academic fields, but also of places from Las Vegas to Times Square. Stops on this tour support his thesis, which is that money and markets are essentially artful confidence games.
For example, he notes that in the 1987 movie "Wall Street," the character Gordon Gekko says "Money...is transferred from one perception to another." Taylor then recounts how Wall Street fueled the public's perceptions of Internet stocks during the late 1990s stock bubble. Financial journalists, stock analysts, traders, advisors, and company officials all promoted fledgling Internet companies with skyrocketing stock prices. Ambitious teenagers talked up the price of small stocks in Internet bulletin boards and then sold them at a profit. The NASDAQ market opened a glitzy new TV studio for business reports in the media saturated & neon-lit Times Square. Using these examples, Taylor makes the point that the financial markets and the media are clearly intertwined, and that just some misplaced trust in them can bring financial markets through a boom & bust cycle.
Taylor also discusses money and how it gets its value. Prior to 1971, the value of the US dollar was backed by gold held by the US Treasury. Generally, a gold standard prevents governments from arbitrarily running the presses to pay debts, which reduces the threat of inflation & boosts investor confidence. But what backs the value of gold? In short, only our collective confidence in it. Gold's value is not intrinsic to the metal; it's purely mental, and based on communal faith and trust. Because of that, going off the gold standard was difficult mental and emotional step for some in 1971.
Taylor also discusses the sociologist Georg Simmel and his work on the philosophy of money. Simmel's view was that economic exchanges are a form of social interaction, albeit interactions that are turned into quantitative, rational, impersonal ones. He thought that the flow of money shows the relationships between people. Thus, money derives its value from to what one can exchange for it in these social interactions, and its value is just socially constructed.
Taylor goes on to discuss multiple views of the economy. He cites Friedrich Hayek's view that the economy is a vast, distributed, complex information processing system, in which prices are used as signals to coordinate peoples' actions. He also discusses modern complexity theory, which views the economy as a dynamic, complex, adaptive system, with self-organized emergent group behavior that transcends any individual person. In both these views, the economic "invisible hand" guides peoples' actions worldwide, and is seemingly omnipresent and omnipotent. This description, Taylor poignantly notes, is very similar to descriptions of God; in fact, Adam Smith's original view of the "invisible hand" was influenced by Calvinism and had God in mind. Thus, God is not dead as some have claimed; he has simply been reborn as the market.
These are just a sampling of topics discussed. Overall, I thought the book had many thought-provoking ideas (& a few bad ones, honestly). It was rich in detail and well researched. But also I thought it could have been structured better to bring out the main points - it was easy to lose the main points amongst the thicket of details about Babbage, Bauhaus and the bond market. Nevertheless, I thought the good outweighed the bad, so I'd recommend it to anyone who is interested in viewing financial markets and the economy from a new perspective, that of a humanities professor and cultural critic.
How Wall Street became Main Street and what comes next... October 6, 2004
30 out of 33 found this review helpful
Having read-or having attempted to read-a few of Mark C. Taylor's recent books, I was delighted to discover that this one, "Confidence Games" was both entirely different and more of the same. Where his always lucidly written, often provocative and sometimes esoteric reviews of contemporary science, art, architecture and fashion have often left me grasping for a conclusion, this book, "Confidence Games" delivers-BIG.
If writing about the meaning of it all were a physical sport, I would hazard that this fleet-footed journey from the birth of money to the terrorist attacks on the World Trade Center is Taylor's marathon: a long, fast ride that covers as much ground as an old school Hollywood epic without the tin-eared dialogue.
Throughout, Taylor deftly summarizes insights from celebrated economic and cultural thinkers of the last several centuries without getting bogged down in the dense foliage of history, all the while reminding readers that what paths may look today like a straight line are almost always a zig zag.
What can you expect to get from this book? For many, it will be a pithy introduction to the incredibly complex financial world we have inherited. Others will likely nod their head as Taylor provides intriguing evidence for the parallels and connections between high finance and high art, God and Mammon, computers and contemporary culture.
Like the best music, this book finds a deep groove early on and smoothly segues from pleasant chords to surprising riffs, never missing a beat even as the drummer gets wicked. This is clearly not summer or beach reading. But, given the often-cited consensus that 9/11 changed everything, a book like "Confidence Games" gives readers an unabashedly pleasurable opportunity to struggle with the very complicated questions that define the world in which we have found ourselves.
Taylor's tenacity in pursuing "the meaning of it all" through the lens of money and markets provides us with the rare opportunity to see the big picture in sharp focus.
Disclosure: Over a decade ago, I was a student of Mr. Taylor's and continue to correspond with the author on current affairs.
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