A giant among pundits, Henry Kaufman is the Wall Street legend who founded the science of Federal Reserve watching, now a popular spectator sport. In a career that spans the last 50 years, his views and forecasts have grown increasingly influential, and his pronouncements often move markets, earning him the sobriquet "Dr. Doom" because of his oft-expressed concern about financial excesses and the failure of regulators to take steps to prevent them from occurring. "Policy can not be predicated on the assumption that reasonable financial behavior is the norm," he writes. On Money and Markets is both a personal memoir and a historical retrospective in which he elaborates on these concerns and prescribes a reorganization of the IMF and the World Bank and the creation of a new international entity with oversight of major financial institutions and markets. Kaufman believes himself "more sensitized than many native-born Americans to economic developments that might endanger the country--a concern that dates back to my formative years, when I listened to my grandfather's recitation of the German hyperinflation of the 1920s--how it contributed to the rise of Nazism and thus forced us to flee Germany." Starting as a $45-a-week bank credit analyst in 1949, Kaufman joined Salomon Brothers in 1962 to build a world-class research department, later becoming a senior partner and vice chairman. He was the first person at Salomon to hold a doctoral degree, beginning a trend in the financial community toward greater analytical sophistication, one that would broaden and deepen in later decades. When he began interest-rate analysis and forecasting, information on the Federal Reserve was rare, and his observations quickly gained a large audience of investors, fund managers, economists, and policymakers. He writes, "In spite of its imperfections, the Federal Reserve comes closer to being an independent and objective arbiter and policy body than any other institution in our economic democracy."
He concludes the book by looking backward a century for a sense of perspective on the role of finance in the modern world. Former Fed chairman Paul Volcker, Kaufman's contemporary, rightly suggests in the foreword that this book "should be prescribed reading for all whose future and fortunes are tied to the performance of our financial system." --Scott Harrison
From Library Journal
For 26 years (through most of the 1980s), Kaufman was a highly respected economist with the Wall Street firm of Salomon Brothers, and his economic forecasts frequently affected the stock market. The publication of this book, which is part autobiography, part financial history and business analysis, is thus significant. Kaufman's personal story is very much a "rags-to-riches" tale that starts with a perilous flight from Nazi Germany in December 1937 to the United States, where he and his family were forced to start over. It wasn't easy, but Kaufman took to his new country with a passion. While at Salomon, Kaufman was a firsthand witness to many momentous financial events, including the market crash of 1987. The author's description of the trading floors at Salomon make for lively reading. Whether examining interest rates or derivatives, he writes gracefully and knowledgeably, much like the genuine Wall Street insider he is. This is an important book for anyone wishing to understand not only the "dismal science" of economics but how Wall Street works. Highly recommended for all public, specialized, or academic libraries with business collections.DRichard Drezen, Washington Post News Research, Washington, DC
Copyright 2000 Reed Business Information, Inc.
From Kirkus Reviews
A superior course in economics (with a glimpse of biography) from Dr. Gloom, the famous monetarist, financial forecaster, and bond guru who earned his sobriquet with his infallably honest, level, and sometimes unwelcome economic pronouncements.Kaufman's life began in a small town in Germany, continued as a young refugee of the Nazi regime and ends with this, the accumulation of a life's study of the way money works. And reasonable and clear-headed it all is, too. Here's how economies rise and fall: it all hinges on credit-risk evaluation (often improperly assayed or, in the midst of profit lust, not done at all). Hence, Mexico, Penn Central, the Savings and Loan debacle, and a host of other financial dark days. The more risk out there, the more instruments will be created to hedge against that risk, Kaufman maintains, and the more volatile markets become. That's us. Now. The efficient and careful allocation of credit precludes disaster. Not too much debt; not too much regulation; not too much of much. What's needed is a re-tooling of the IMF and the World Bank, and the creation of something Kaufman calls a Board of Overseers of World Markets, which would serve as a finger-shaker rather than a regulator. Decency has always been a hallmark of Kaufman's and, thanks to it, he saved his (and the firm that bore his name's) neck by withdrawing from a collaboration with the ill-fated Drexel Burnham (when he heard that Michael Milken was to be involved). The market isn't human, he insists, and it doesn't have human characteristics. It is the sum total of thousands of largely uncoordinated decisions, many of which are based on little or no analysis. Nothing in the recent economic climate has happened to improve his rainy mood. The apocalypse is nigh, so look out. I am confident that sometime within the next few years, the financial euphoria will be reversed. Not exactly cheery, but definitely worth knowing. (Introduction by Paul A. Volcker) -- Copyright © 2000 Kirkus Associates, LP. All rights reserved.
From the Back Cover
One of Wall Street's leading thinkers provides valuable insights into today's world financial markets.
"On Money and Markets should be prescribed reading for all those whose future and fortunes are tied to the performance of our financial system. But more than that, the book is an absorbing story, a saga of how one man, starting as a butcher's son in a German village and thrust as a refugee into the citadel of capitalism, could make an important contribution to the world of finance and to the educational and cultural life of the city at the center of that world."
Paul A. Volcker, from the Foreword
"Henry Kaufman's On Money and Markets is a fascinating journey with one of the financial community's most successful and respected figures. It is also a warmly human memoir of a young German immigrant who became a Wall Street icon."
Dr. Henry A. Kissinger
"On Money and Markets could not have come along at a better time. With penetrating insight and a wealth of experience, Henry Kaufman makes a powerful case for what is important and what is ephemeral in business and finance. Investors, policymakers, and busines leaders would do well to take notice."George Soros.
About the Author
Henry Kaufman (New York, NY), former vice chairman of Salomon Inc, is the president of Henry Kaufman & Co, a financial management and consulting firm. One of the worlds most influential economists, Kaufman has written for The New York Times, Newsweek, The Economist, and The Washington Post.
