Best resources to become literate in macroeconomics and financial markets?

December 4, 2006 10:12 PM

What are some good books and other resources that could help me understand, to the point of allowing me to engage in reasonably intelligent debate, macroeconomics and financial markets?

I have a rough understanding of basic economic concepts like supply and demand, inflation, utility, diminishing returns, and so on. But I need more and better. When people talk about trends in currency markets, current account deficits, the appeal of asset securitization, the meaning and effects of foreign reserves, the potentially destabilizing effects of hedge funds on global markets, the implications of savings vs. consumption, some of the complexities around management of the money supply, protectionism vs. free trade, natural rates of unemployment, and on and on -- I have pretty vague ideas about many of these, but I need greater detail, without going into mathematical exactitude. Where can I go for an intelligent but not pedantic understanding? Thanks.

posted by shivohum to work & money (13 comments total)

Here's a really nice review of asset securitization.
posted by ikkyu2 at 11:26 PM on December 4, 2006

Much of what you described at the beginning is microeconomic theories. Its boring, but you could do worse than picking up a used textbook off somewhere like half.com. I can't recommend anything in particular, but a skimming or so of a textbook would probably be enough. You can focus on the features you need, while ignoring things like Aggregate Supply and Demand (which I never quite got...).

You say you don't want mathematical exactitude, and a freshmen level textbook will have the appropriate graphs and lines pointed in the right direction, while not going hardcore into math.
posted by cschneid at 11:53 PM on December 4, 2006

This first one isn't a creative answer, but it worked for me. When I was studying up for the FSWE I asked my bro, who was an economics major, this very question. He handed me a copy of Cliffs Notes on economics. It's dry and concise and great for cramming.

He said it taught him everything he needed to know in order to graduate. He was exaggerating of course, but he got his masters, so there was something to it.

If you want to delve further, then there are some more engaging options.

I enjoyed reading both the Arm Chair Economist and the Undercover Economist, both of which were pretty good pop econ books. They're not exactly what you're looking for, but are more pertinent than the more well known Freakonomics.

If you're not in a hurry, I highly recommend the Teaching Company's Economics course by Timothy Taylor. People say that it's available on BitTorrent, but then you lose out on all the useful printed material. I think $70 is a fair price, cheaper than a new textbook.

I would NOT recommend Economics in One Lesson by Henry Hazlitt. I listened to the audio version from Audible. The book is very frustrating to listen to if you are not ardent neo classical economist. I found a lot of the conclusions dated. Hazlitt burns many strawmen in his argument and his tone seemed awfully smug to me.
posted by Telf at 1:04 AM on December 5, 2006

Sorry, I should have read your question closer. Most of my suggestions were far to broad. It looks like you're looking for much more concrete information over general economic theory.

All of my suggestions avoid heavy math, but it looks like you might need something oriented more toward investing than cocktail conversations.
posted by Telf at 1:08 AM on December 5, 2006

Memos to the President was highly recommended to me.
posted by Phred182 at 2:02 AM on December 5, 2006

To answer the finance industry part of your question, much of the information available to the public is of poor quality, as financial firms prefer to avoid scrutiny and trade information in small trickles when employees switch firms. (This dark, moist environment is highly conducive to rot).

Ideally, you want to find books that are written by people who were a) on the inside but are b) no longer paid to keep secrets; c) are well-educated and thoughtful enough to have a big-picture view of the industry.

Two of the best books of this type are:

Frank Partnoy, Infectious Greed.

Nomi Prins, The Corporate Mugging of America.

The titles reveal their point of view, but they are both talented, articulate, and highly accomplished Wall Street veterans: Prins was a Goldman MD and Partnoy is a CSFB and Morgan Stanley derivatives salesman turned law professor.

If I may, I'd refer you to this old thread on Wall Street. I stand by those recommendations, but I think these two will give you an oustanding view of how the banking and finance industries, financial markets, and corporations work together.
posted by Phred182 at 2:24 AM on December 5, 2006

There are many blogs that cover these subjects. A few I've found educational:

Econbrowser
Economist's View
Brad Setser
New Economist
macroblog
The Mess That Greenspan Made
Bill Cara
Calculated Risk
Skeptical Speculator
Capital Spectator
posted by sfenders at 4:25 AM on December 5, 2006

Start with John Kenneth Galbraith. He's a witty writer: really fun to read. Try The Great Crash 1929, The Essential Galbraith, or The Affluent Society. These are great reads.
posted by RussHy at 4:41 AM on December 5, 2006

I can't recommend highly enough the set text for graduate interviewees of City of London / Wall Street firms, How to Read The Financial Pages.

The Money Machine (How the City Works) was an interesting read too and on the level that you're after.
posted by dmt at 6:11 AM on December 5, 2006

Don't forget the classic Intelligent Investor by Benjamin Graham (who happens to be Warren Buffet's mentor).

This book is geared more toward your investment/finance questions, but anyone who invests should read this at some point.
posted by chitlin at 7:32 AM on December 5, 2006

One other tangential suggestion, grab a copy of Freakanomics. He takes economic analysis and applies it to social trends. Very interesting, and an easy read.
posted by cschneid at 9:40 AM on December 5, 2006

The Economist magazine covers many of these topics on a regular basis. It also covers world news well and is interesting to read. It will give you sufficient background knowledge to argue with a generally literate/informed person (but not a trained economist/professional financier).
posted by crazycanuck at 10:17 AM on December 5, 2006

Naked Economics has been a very thorough, and entertaining, introduction to the field for me.
posted by mooders at 11:08 AM on December 5, 2006