Readings

A thinking person’s guide to personal finance

Your Money and Your Life: A Lifetime Approach to Money Management
(Stanford University Press, 2011), Robert Aliber, Professor Emeritus of International Economics and Finance

Photo of Robert Aliber

Perhaps best known for his theory of foreign direct investment, Robert Aliber has devoted much of his career to demystifying international finance. In addition to his work as a consultant with the World Bank, the Federal Reserve, and the International Monetary Fund, he also has a strong background in financial management.

In his book Your Money and Your Life, Aliber devotes nearly 400 pages of insight and strategy to ways in which readers can make efficient financial decisions at key moments throughout their lives—from selecting a college to buying a house to planning for retirement. Addressing a wide array of questions, he offers both theoretical and practical financial advice to readers.

Aliber’s approach to personal finance is what makes him unique. Readers don’t just get tips—like his takeaway lists of “actionables” at the end of every chapter—they actually learn how to think through their own financial decisions. Aliber explains the sophisticated concepts that underlie money management and how they apply to everyday life. As the Wilson Quarterly states, “If you want to know not just how much life insurance to buy, but how insurance markets function, Aliber is your man.”—E.O., J.S.

Two distinctive approaches to financial reform

Reforming U.S. Financial Markets: Reflections Before and Beyond Dodd-Frank (MIT Press, 2011), Randall Kroszner, Norman R. Bobins Professor of Economics, and Robert J. Shiller

Photo of Randall Kroszner

Many consider the meltdown of the world’s financial system in 2007 to be the worst economic crisis since the Great Depression of the 1930s. Major financial firms collapsed, asset values declined with a consequent destruction of paper wealth, credit flows were interrupted, confidence in firms and credit market instruments was lost, and governments and central banks intervened in an unprecedented way, in an attempt to control the situation and mitigate damage.

What remains unresolved—Dodd-Frank (and countless opinions on the subject) notwithstanding—is how, precisely, we can confidently avoid a repeat performance. In Reforming U.S. Financial Markets: Reflections Before and Beyond Dodd-Frank, leading economists Randall Kroszner and Robert Shiller discuss what the United States needs to do in order to prevent another such catastrophe.

The discussion between Kroszner and Shiller, which began in an early 2009 symposium, takes place in the wake of the Dodd-Frank Wall Street Reform and Consumer and Protection Act of 2010. But the economists’ exchange goes far beyond a nuts-and-bolts approach to the legislative and regulatory repair job to consider the greater implications of these fundamental changes to our financial markets.

Written in the form of an ongoing dialogue between experts, the book made it onto the Washington Post’s list of top political bestsellers. Kroszner concentrates on regulatory reform, providing a brief analysis of the fragilities of the system and proposing ways to make markets more robust, including credit rating agencies, over-the-counter derivatives, bankruptcy resolution, and the mortgage securitization market. Shiller focuses on democratizing and humanizing the world of finance, arguing that reform must make the full power of financial theory work for everyone—bringing the technology of finance to bear on managing risk, for example—and should acknowledge the reality of human nature. Following each of their analyses, the book presents four “Comments”—critical commentary from four leading financial scholars—followed by responses from Shiller and Kroszner.

Ultimately, the conversation concludes with Shiller’s rejoinder, in which he states his belief that he and Kroszner agree that “regulation should be opening the door to new and better financial structures, structures that use our best technology to serve the people, not to impose clumsy barriers and restrictions.”—K.M.

Last Updated 9/16/11