Emotions in Finance

Index

9/11 disaster, 75, 185

Abelson, Alan:

   on accountancy firms, 126;

   on Federal Reserve, 112, 118, 119, 120, 180;

    on law firms, 169–70;

   on media, 48, 51, 52, 53, 66;

   on personality cults, 172;

   on Wall Street, 124, 125, 126, 128–9, 160, 185, 203

accountancy firms, 4, 23–4, 96–7, 126–8, 131, 133, 136, 155, 156, 162, 187;

   trustworthiness, 113, 123

accounting for future cost, 23, 138–42

accounting standards, 127, 131, 139

actuaries, 142–4

Adam Smith think-tanks, 159, 175, 176

adaptation to institutions, 71, 73–5

Advance Bank, 149, 150

AFR. see Australian Financial Review

Allied Irish Banks (AIB) scandal (2002), 78–9, 87, 136, 147

AMP (Australian Mutual Provident Society), 198

analysts, 49, 54, 55–8, 126, 163

Andersen (accountancy firm), 123, 126, 127, 136, 165, 173, 196, 205

Anglo-American financial world:

   accounting standards, 126–7;

   central banks, 102;

   emotional climate, 180;

   globalisation, 60;

   governments, 194, 203;

   household debt, 13–14, 45;

   markets, 3;

   politics, 94, 95;

   share ownership, 45, 161;

   universities, 177, 201;

   utopianism and social movements, 159, 162, 168;

   see also Asia Europe

animal spirits, 19, 30, 33, 34, 38, 68, 185–6

AOL, 167

argument of the book, 15–16

Asia, 3, 65, 81, 103, 148, 149, 170, 174, 188. see also Japan

ATTAC movement, 157

attributions, 90–2, 101, 109, 113, 114. see also blame;

   reputation

audiences, media in trust to, 44–5

Augar, P., 97, 200

Australia:

   banking crises, 189;

   firms, 198;

   household debt, 13;

   ideology and social movements, 162, 176, 177, 178, 188;

   insurance, 144;

   interest, 32;

   interviews, 41, 42;

   investment banks, 126;

   Labor governments, 102, 162, 176;

   media, 41, 43, 45, 47, 48, 56, 58, 59, 61–2, 65;

   national differences, 41, 42, 149;

   Treasury, 63, 152, 207;

   trust and distrust, 121. see also Reserve Bank of Australia (RBA)

The Australian, 126

Australian Council of Trade Unions, 74

Australian Financial Review (AFR), 47, 48, 63

Australian Prudential Regulatory Authority (APRA), 124

Australian Stock Exchange, 48, 61

avarice. see greed

Bagehot, Walter, 11, 12, 13, 19, 39, 67

Baker, W., 45, 65

Bakunin, Mikhail, 170

Banca d’Italia, 12

Bank Leu, 78

Bank of Credit and Commerce International (BCCI) scandal, 52, 124, 136

Bank of England (BoE):

   credibility, 104, 106, 109;

   credit-raters and confidence surveys, 149, 155;

   decision-making, 83, 86;

   history, 10–12, 19, 72, 95, 99, 119;

   ideology, 157–8;

   independence, 14, 99–102, 204;

   Monetary Policy Committee (MPC), 72, 73, 74, 84, 87, 101, 157, 158;

   non-decisions, 79–80;

   organisational memory, 87;

   private sector relations, 24, 72, 96–7, 98, 99, 109, 124;

   reputation, 115

Bank for International Settlements, Basle, 99

Bank of Japan (BoJ), 101, 107–8, 109

Bankers Trust, 175

banks. see central banks;

   commercial (retail) banks;

   investment banks;

   merchant banks;

   private banks

Banque de France, 12

Barbalet, Jack, 27, 34, 70

Barclays Bank, 96, 98

Barings Bank, 21, 72, 73, 78, 98, 136, 147, 171

Barlow Cloud scandal, 52

Barrons, 24, 46, 47, 48, 49, 50, 51, 52, 112

BBC (British Broadcasting Corporation), 60

BCCI scandal, 52, 124, 136

Bell, Daniel, 20, 25

Benjamin, Walter, 181, 189

Berle, A. & G. Means, 24–5

Berlusconi, Silvio, 128

Bernanke, Ben, 98–9, 101, 109

Big Bang (1986), 96–7, 162, 181, 189, 204

Big Five, 126, 136, 142

Big Four, 127, 142

Birt, Jonathon, 59–60, 62, 170

Bismarck, Otto von, 188

Black, Fischer, 145

Blair, Tony, 157, 158, 159, 175

blame, 4, 28, 29, 90–2, 171

   avoiding odium, 114–16;

   media, 44, 46, 59

Blinder, Alan, 99;

   FOMC transcripts, 91–2, 110;

   interview with, 72–3, 75, 83, 86, 110, 119, 121–2, 153, 203

Blinder, Alan et al. How Do Central Bankers Talk? (2001), 82, 84, 86, 101, 102, 103, 104–5, 106, 110, 119, 164

Bloch, Maurice, 188

BoE. see Bank of England

Bogle, John, 77, 130–1, 164, 171, 195–6, 201

Braithwaite, J. & P. Drahos, 11, 12, 95, 97, 98, 100, 148, 188, 190

Bretton Woods, 1, 95, 99, 147, 188

British Broadcasting Corporation (BBC), 60

British Petroleum, 60

BTR (British conglomerate), 26

bubbles. see speculation

Budd, Alan, 73, 82, 87, 96, 97–8, 99, 119–20, 204, 206

Buffet, Warren, 172

Bundesbank, 95, 100, 106, 107, 180

Burns, Arthur, 6, 49, 74, 100

Bush, George (Snr), 108

Bush, George W., 43, 101, 108, 142, 175, 178

Business Week, 49, 50, 60, 66, 168

Calhoun, Craig, 20

California Public Employees’ Retirement System (Calpers), 178

Canada, 13, 45, 127, 157, 176

capitalism, 9, 12, 15, 21, 22, 26, 40, 168, 173

Carroll, V. J., 43, 47, 48, 51, 52, 59, 63, 66, 118, 205

Carruthers, B. & W. N. Espeland, 23, 24, 138, 139, 140, 141

Carter, Jimmy, 162

caution:

   collective memory and, 87, 88, 89, 90;

   ideology and, 163, 168–9, 180, 181;

   key emotional term, 3, 19, 183, 185, 189, 195, 196, 198, 199, 201, 202–3, 207;

   market solutions and, 189, 190;

   trust in risk, 135

censorship, 43, 173

central banks:

   confidence, 94–112;

   confidence games, 109–12;

   credibility, 2–3, 94–112, 113–21, 122, 163;

   credit-rating agencies and, 149;

   decision-making, 67, 72–3, 82–6, 93, 177;

   ideology, 180;

   impartial mentality, 179–80;

   impersonal relations, 94, 95–9;

   independence, 10, 11, 95, 99–102, 106, 115, 118, 119, 157, 158, 179–80, 204–5;

   interviews with former decision-makers, 68;

   leading by guesswork, 109–12;

   monetary policy, 13, 94–113, 152, 153, 161, 169, 191, 193, 195, 204–5;

   money, 2, 9, 10, 12–14;

   private sector relations, 23, 94, 95–9, 121–2, 123;

   public relations, 94, 95–9;

   transparency, 105, 119. see also Bank of England (BoE)

   Bank of Japan (BoJ);

   European Central Bank (ECB);

   Federal Reserve (US);

   Reserve Bank of Australia (RBA)

Centre for Policy Studies, 178

CEOs. see decision-making;

   incentives;

   personality cults

Chamberlain, Roderick, 72, 78–9, 80–2, 87, 90, 91, 99, 198, 200

Chan, Paul, 81, 89, 109, 138, 147, 199

chaos theory, 36, 137, 152

Chase (bank), 124, 125, 147, 156

Chiasso Affair, 87–8

Chick, Victoria, 13, 28

Chifley, Ben, 31, 32

Chinese walls, 97, 125, 128

Citigroup, 56, 147

City of London:

   Bank of England and, 24, 73, 96–7, 98, 99, 109;

   credibility, 125–6, 135;

   decision-making, 72, 76;

   greed, 2;

   history, 8, 11–12, 19, 26, 39, 95;

   ideology, 157, 158, 167;

   incentives, 200;

   insurance, 155;

   interviews, 42;

   media and, 47, 65, 205;

   opportunism, 170;

   risk management, 196;

   scandals, 87, 88–9, 122, 197

Clarke, F. & G. Dean, 128

classical economics, 32

Clinton administration, 86, 108, 162, 189

collective memory, 87–90, 157, 161, 163

Collins, Randall, 137, 141, 172

Colombo, Mark, 87

commercial (retail) banks, 3, 4, 11–12, 13, 14, 24, 96–7, 136, 157, 158

commodification of money, 12, 14

Companies Act (UK, 1900) 23

Conference Board (US), 153

confidence, 29, 68–71;

   central banks, 94–112, 115, 118;

   financial organisations, 5;

   forecasting, 153;

   ideology and, 161, 179;

   Keynes, 33;

   money, 12

confidence surveys, 133, 136, 153–5

Conservative (Tory) Party (UK), 96, 97, 156–7, 165, 175, 192. see also Thatcher, Margaret

Cooper, Jim, 48

Coopers Lybrand, 127

corporate memory, 87–90, 157, 161, 163

corporate raiding, 25–6, 157, 162, 167, 170, 173

corporations. see firms

Costello, Peter, 152

credibility, 3, 19–20, 44, 157, 163;

   avoiding odium, 114–16;

   central banks, 2–3, 94–112, 113–21, 122;

   credit-rating agencies, 150, 151;

   private sector and public sector, 121–2;

   Willliamson, 135

credit, 14, 15

credit-rating agencies, 19, 22, 24, 55, 133, 136, 148–51;

   confidence surveys and, 155, 156;

   trustworthiness, 113, 122

Credit Suisse Group, 78, 87–8

creditworthiness, 14. see also credit-rating agencies

crises, 3, 4, 11–12, 19, 100, 159, 163, 167–8, 169, 171, 173, 189

Crown Agents (development bank), 72

cult of personality. see personality cults

Currency Transaction Tax (Tobin Tax), 157, 190–2

cycles, 19, 24;

   long-term and short-term, 187–9

Daily Telegraph, 129

Dale, Henry, 72, 104, 124, 136

Damasio, A. R., 20, 34

Dangerfield, George, 157, 159

data. see information

Davidson, Paul, 36, 38

Davies, Glyn, 5, 9, 10, 124

debts, 6–10

decision-making:

   financial institutions, 67–93;

   non-decisions, 79–80;

   personal versus organisational, 80–2;

   private sector investment, 77–9;

   public sector, 73, 77, 79–80, 82–6, 92. see also entscheidungsdfreudig (happy to make decisions)

democracy, 3, 4, 12, 25, 113, 157, 175–6, 179, 180, 188, 189, 190, 193–5

Dequech, David, 38, 41, 68, 73

Descartes, René, 186

Deutsche Bank, 147

diagrams:

   Figure, 4.1, 41, 68–71, 73, 80;

    Figure, 4.2, 41, 68–71, 75, 79, 80, 82, 87, 90, 91

dishonesty, 122–3

distrust:

   dishonesty and, 122–3;

   hierarchies of, 121–2;

   impersonal, 9, 20–4;

   promises and, 2, 12;

   stock options and, 128–9;

   uncertainty and, 2, 5, 9. see also trust

dot.com boom. see Nasdaq (dot.com) boom and crash

doubters. see scepticism

Dow Jones (wire service), 47, 110, 150

Drexel Burnham Lambert, 79, 168

Duisenberg, W., 106, 107

Dun & Bradstreet, 148, 152, 153–4

Dunlop (company), 47

East India Company, 139

EBRD (European Bank of Reconstruction and Development), 149

economic crises. see crises

economics. see classical economics;

   institutionalist economics

   Keynesian economics;

   Marxian economics;

   orthodox (neo-classical) economics;

   Post-Keynesian economics;

The Economist, 19, 46, 51, 52, 53, 60, 119, 123, 126, 205

editorial independence, 49–53, 55

Edwards, John, 122

efficient market hypothesis (EMH), 36

Eichengreen, B., 118, 191

Elliott, Larry, 46, 52, 54, 58, 60, 61, 103, 162–3, 192

Elster, Jon, 30, 31, 34

EMH (efficient market hypothesis), 36

emotional climate, 180–1

emotions, 1, 2–3;

   in core financial structures, 18–20;

   expectations and interest, 30–1;

   financial institutions, 67–77, 93;

   within financial organisations, 194–201;

   probability and, 36–40;

   between public and private organisations, 201–6;

   public sector decision-making, 82–6;

   rationality and, 17–42, 182–206. see also impersonal emotions, caution

Enlightenment, 186, 193

Enron scandal (2002):

   accountants and, 123, 141, 205;

   analysts and, 170;

   blame, CEO incentive schemes, 32, 128, 171, 197;

    effect, 161, 178;

   ideology, 175;

   media and, 49, 54, 62, 123;

   pension funds and, 156, 178, 187, 207;

   rating agencies, 149, 150;

   regulation and, 108, 123, 164, 193, 196

entrepreneurship, 13, 22, 101

entscheidungsdfreudig (happy to make decisions), 80–2, 86, 165, 170, 186, 198

Equitable Life, 143–4

Esquire, 49

Eurodollars, 95, 162, 177

Europe:

   banks, 65, 102, 148 (see also European Central Bank)

   constitutional reforms 202;

    crises, 3

   cultural differences, 81

   history, 8, 10, 11, 12, 14, 24, 25, 161, 188, 189

   media, 48, 60

   social movements, 157

   utopianism, 159. see also France

   Germany

   Switzerland

   United Kingdom

European Bank of Reconstruction and Development (EBRD), 149

European Central Bank (ECB), 101, 106, 108, 203

European Monetary Union, 106

European Parliament, 106–7

European Treasury, 106

Ewald, F., 195

exchange rates, 3, 99

expectations, 2, 5, 32–5, 38, 41, 68–9, 73, 82, 141, 157–8, 163, 179, 183–4;

   confidence surveys, 153–4;

   media and, 64;

   rationality and emotions, 2, 18, 30–1;

   see also future

experts:

   evidence from, 41–2;

   interviews with, 14–15;

   interviews with decision-makers, 68–71

exuberance. see irrational exuberance

Exxon, 60

failure. see blame;

   scandals

Fairfax media, 43

FASB. see Financial Accounting Standards Board (FASB)

fear, 2, 3, 4, 20, 80, 87;

   avoiding odium, 114–16

Federal Open Market Committee (FOMC):

   adaptation, 74;

   avoiding odium, 114, 116;

   confidence games, 109–12;

   public relations, 104, 105;

   reputation, 117–18, 120;

   transcripts of meetings, 15, 83–6, 91–2, 103, 110–11, 113, 124, 125, 147, 180, 198;

   uncertainty, 75

Federal Reserve (US central bank):

   1929 crash, 114;

   credibility, 101, 103–5, 106, 108, 109, 111–12;

   forecasting, 153;

   history, 12, 24;

   ideology and social movements, 162, 180;

   independence, 99–102, 205;

   media and, 54, 66;

   personalities, 72;

   psychology, 37;

   public duty, 206;

   public relations, 94, 95–9;

   trust hierarchies, 114, 115–16, 117, 121–2, 124;

   uncertainty, 1;

   Wall Street and, 12, 54, 85, 99, 100–1, 104, 106, 109, 115, 116, 120–1, 195

Fedspeak, 75, 95, 104–5, 110, 120

fiduciary arrangements, 9, 20–4

Financial Accounting Standards Board (FASB), 141–2

financial analysts, 49, 54, 55–8, 126, 163

financial crises. see crises

financial information. see information

financial institutions, 3, 4, 5;

   agency, 18;

   emotions, 75–7;

   emotions and decision-making, 67–93;

   emotions within, 194–201;

   interviews with decision-makers, 68–71

financial media:

   censorship, 43;

   central banks and, 114–15, 117–19, 120;

   credit-rating agencies and, 150;

   editorial independence, 49–53, 55;

   education, 201;

   finance journalists versus analysts, 54, 55–8;

   global trends and national differences, 58–9;

   growth, 136;

   ideology, 161;

   influence, 38;

   as institutional trust agencies, 43–66;

   investment banks and, 123–6;

   personality cults, 172;

   private sector and, 38, 123;

   professional sceptics in, 45–8;

   in trust to publics, 44–5;

   trustworthiness, 113, 121–2

Financial Services Authority (FSA, UK), 98, 124–5, 159

financial structures:

   emotions in, 18–20

Financial Times, 47, 49, 51, 52, 62, 114, 123

financialisation of life, 26, 157, 158, 159, 160, 162, 177, 178, 185

firewalls (Chinese walls), 97, 125, 128

firms, 20;

   data, 133–5;

   emotions, 2. see also shareholders

Fisse, B. & J. Braithwaite, 194

Fitch Ratings, 148

Flemming, John, 82, 83, 89, 97, 106–8, 114, 149, 154, 155

Florida, 178

FOMC. see Federal Open Market Committee

Forbes, 50

forecasting, 133, 136, 151–3, 154, 172, 173, 186

foreign ownership, 96

Forrestal, Robert P., 109

Fortune magazine, 50, 59, 178, 195

France, 60, 101, 126

France Telecom, 126

Fraser, Bernie (B. W.):

   on Bretton Woods and deregulation, 99;

   on central bank independence, 101, 115, 205;

   on decision-making, 80, 82;

   on European Central Bank, 107;

   on fiscal policy, 108, 206;

   on ideology, 162;

   on markets, 117;

   on reputation, 117–18;

   on Reserve Bank of Australia, 73, 74, 75–6;

   on share options, 128, 198–9;

   on Tobin Tax, 192

fraud, 149

Frey, Werner, 78, 79, 80, 88, 123, 134–5, 138, 150, 198, 200

Friedman, Benjamin, 23

Friedman, Milton, 25, 116, 159, 162, 176

Friedman, Thomas, 165

FSA (Financial Services Authority, UK), 98, 124–5, 159

Fukuyama, Francis, 28

future. see forecasting;

   speculation

future cost. see accounting for future cost

future-oriented emotions. see expectations; uncertainty

G5 countries, 163

G7 countries, 99, 202

Gabriel, Y., 42, 137

Galbraith, John Kenneth, 9, 10, 11, 13, 25, 95, 100, 206

gambling, 3, 37–8, 143, 145, 146, 160

General Electric, 137

Germany, 60, 81, 89, 95, 96, 98, 100, 106, 107, 139, 180, 188, 194, 199

Gladstone, William Ewart, 1, 10–11

Glass-Steagall Act, 24, 95, 97, 187

global markets, 16

global trends, 20, 60;

   financial media, 58–9

Goddard, P., 53

Golden Straitjacket, 165, 179

Goldman Sachs, 49, 50, 98, 147

Goldsmith (British conglomerate), 26

Goldstein, Ken, 154

Gonzales, Henry, 116

Goodhart, Charles, 74–5, 80, 82–3, 184

Gore, Al, 202

government debt, 2, 11, 12, 188

government intervention, 1, 2, 8, 14, 161, 162–3, 179, 188, 189–90, 192, 193

government policy, 4, 14. see also central banks

   public sector

Gramley, Lyle, 108, 115–16

Grant, James, 55, 62

Grant Thornton, 128

Grant’s Interest Rate Observer, 139

Gray, John, 159, 162, 168, 175, 176, 177

Great Crash (1929), 13, 24, 95, 160, 170, 208

Great Depression, 1, 9, 13, 14, 15, 95

greed, 2, 23, 30, 49, 54, 59, 87, 123, 128, 159, 168, 188;

   interest and reason, 31–2;

   risk and, 159–60. see also incentives

Greenspan, Alan:

   cult of personality, 118–21;

   FOMC transcripts, 1, 83–6, 91–2, 103, 110–12, 117–18;

   ideology, 180;

   independence, 108;

   irrational exuberance thesis, 37, 114, 115;

   media and public relations, 43–4, 54, 62, 63, 97, 102;

   personality, 72;

   reputation, 106, 109, 117–18, 139;

   uncertainty, 75;

   Wall Street experience, 85, 99, 198

Greider, William, 7, 74, 105, 112, 115, 180

grovelling, 71, 73–5

The Guardian, 46, 52, 175

gurus. see personality cults

Habermas, Jürgen, 193

Hale, Brian, 47, 50, 54, 58, 59, 89–90, 167, 186

Hanson (British conglomerate), 26

Hawke, Bob, 162

Hayek, Friedrich, 32, 159, 178, 207

Heclo, H. & A. Wildavsky, 68, 71

hedge funds, 14, 15, 76, 103. see also Long Term Capital Management (LTCM) collapse (1998)

Heilbroner, Robert, 175

Heimer, Carol, 27, 29, 143, 148, 202

Henwood, Doug, 12, 14, 15, 25, 105

Higgs review, 197

HIH scandal, 144

Hirsch, Paul, 167, 170, 177

Hirschman, Albert, 31–2, 160, 206

historical information. see past data

Hoechst (firm), 60

Hood, Christopher, 162

How Do Central Bankers Talk?. see Blinder, Alan et al. How Do Central Bankers Talk?

Howard, John, 177

HSBC, 122

Hume, David, 83

Hutton, Will, 159

IBES, 111

IBM, 167

ICI, 178

ideology, 71, 157, 158, 160, 161, 173–5, 181, 194;

   utopia and, 160–2, 164 (see also utopianism). see also libertarianism, Conservative Party

IFO Institute, Munich, 154

IMF. see International Monetary Fund (IMF)

impersonal emotions:

   distrust, 4, 20–4;

   in organisations, 183–5;

   trust, 9, 20–4;

    concept, 26–30;

   expectations, 41;

   in markets, 3–5

impersonal processes, 72;

   central bank relations, 94, 95–9. see also markets

   socialisation

incentives, 32, 93, 197–9. see also greed;

   stock options

Index of Consumer Sentiment, 153

individual agency, 18, 21, 29, 39–40;

   credibility and, 19–20;

   ideology, 173, 175;

   social field and, 157, 158

individualism, 33, 71, 176, 188;

   personal dispositions, 68, 71–3

information, 34, 133–56;

   firms, 133–5;

   media and, 44, 59–62, 117–18

information society, 14, 15, 20, 41, 136, 207

information technology. see IT

ING, 147

Ingham, Geoffrey:

   on money, 7, 8, 10, 12, 13, 40;

   on socialisation, 72;

   on sociology and economics, 6;

   on trust, 17

Ingham, Graham:

   on central bank independence, 100;

   on historical data, 139–40;

   on ideology, 158, 162, 173;

   on media, 46, 51, 52, 53, 54, 58, 59

Initial Public Offerings (IPOs), 54, 57, 59, 60, 97, 111, 140

institutionalisation:

   of money, 10–12;

   socialisation, 71–3

institutionalist economics, 38

insurance, 3, 133, 142–8, 195

interest, 30–1, 32, 39;

   avarice and reason, 31–2;

   rationality and emotions, 30–1. see also greed;

   self-interest

interest rates, 10, 11, 12, 102, 107, 112, 115, 117.

   see also central banks

International Accounting Standards, 190

International Monetary Fund (IMF), 95, 101, 103, 131, 136, 149–50, 156, 163, 183, 190, 201

internet. see Nasdaq (dot.com) boom and crash (2000)

intervention. see government intervention

interviews with experts, 14–15, 41–2, 68–71

intuition, 68, 78, 91, 93

investment banks, 3, 21, 24, 36, 97, 99, 103, 136, 173;

   central banks and, 114, 117;

   decision-making, 76–7;

   financial media and, 43, 56, 57, 123–6;

   ideology, 161, 162, 167, 173;

   trustworthiness, 113, 121

IPOs. see Initial Public Offerings (IPOs)

Iraq, 75

Ironmonger, Duncan, 152, 153–4

irrational exuberance, 19, 20, 37, 43, 110, 112, 114, 115, 124–5, 169

irrationality. see rationality

IT, 135, 136, 139

Italy, 87–8, 128, 142

Jacobs, Bruce, 145–6, 148

Japan, 13, 15, 25, 26, 96, 101, 107–8, 109, 111, 189

Jefferson, Thomas, 11

Jenkins, Simon, 127

Johnson, Lyndon B., 100, 188

Joint Stock Companies Acts (UK, 1844 and 1868), 23

Jones, Paul, 46, 58

Jordan, Jerry L., 84

journalists. see financial media

Jubilee debt relief movement, 157–8, 179

judgement, 71, 73, 74, 82–6, 94, 95–9

Julius, DeAnne, 82

Kadlec, Daniel, 46, 57, 154–5

Kafka, Franz, 181, 189

Kahneman, Daniel, 37

Kapra movies, 188

Kaufman, Henry, 118, 172–3, 177, 204;

   interview with, 87, 88, 100–1, 125, 147, 161, 164

Kemper, Theodore, 68, 70

Kerin, John, 207

Keynes, John Maynard:

   on animal spirits, 30, 31;

   on capitalism, 7;

   cautionary policies, 168;

   on expectations, 32–4, 35, 38;

   on investors’ judgements, 36;

   on the News, 44, 45, 62, 63, 64;

   on risk, 147;

   on uncertainty and emotions, 4, 5, 13, 19, 37, 39, 67

Keynesian economics:

   animal spirits and emotions, 185–6;

   Bogle and conjectures, 164;

   Federal Reserve, 74, 101, 103, 106;

   forecasting, 152;

   government demand management, 25, 41;

   Japan, 107;

   markets, 163;

   public policy, 177, 186, 188, 189, 196;

   uncertainty and expectations, 5, 35, 38, 64, 77, 134, 137, 183, 185–6;

   utopianism, 170

Kindleberger, Charles, 19, 67, 88, 89, 124, 149, 169

Knight, Frank, 35, 147

Korczynski, M., 39

Kriesler, Peter & John Nevile, 12

Krugman, Paul, 115, 123, 173, 175

Kurtz, Howard, 49, 56

Kynaston, David, 5, 11–12, 13

Kyoto Agreement, 195

Labo(u)r Parties, 176;

   Australia, 102, 162;

   New Zealand, 162;

   United Kingdom, 96, 157–8, 162, 175, 200

Lazar, David, 72, 76

Lazar, Michael, 26, 88–9, 96–7, 127, 129, 143–4, 157–8, 172, 196

Leeson, Nick, 78

Lehrer Show, 62, 63

Lekachman, Robert, 34, 35

Levitas, Ruth, 159, 176

Levitt, Arthur, Jr, 127

Lewis, Michael, 54, 72, 168, 184

libertarianism, 157, 158, 159, 162, 163, 165, 168, 170, 176–7, 181–2, 185, 189, 194, 196

Lincoln, Abraham, 173

Lindsey, Lawrence B., 84, 85, 86, 92, 110–11, 115

Lloyd’s Bank, 87, 96

London. see City of London

Long Term Capital Management (LTCM) collapse (1998):

   arrogance, 79;

   central banks and, 178, 187;

   confidence and caution, 203;

   education, 201;

   Federal Reserve and, 14, 15, 66, 103, 120, 124;

   insurance, 145, 147;

   investment banks and, 124, 125, 156, 193;

   Russia, 175;

   speculation, 14, 15;

   trust and blame, 76, 171;

long-term cycles. see cycles

love, 20

Lowenstein, R., 14, 15, 66, 76, 147

LTCM. see Long Term Capital Management (LTCM)

Lucent, 78

luck, 77, 91–2, 93, 109–12, 118

Ludwig Report, 78

Luhmann, Niklas, 27–8

Macfarlane, Ian J., 12, 75–6

Machiavelli, Nicoló, 31–2

Macmillan, Harold, 90, 156

Mahathir, Dr, 3

MAI (Multilateral Agreement on Investment), 157–8

managers and owners, 22–3, 25

Mannheim, Karl, 159, 164–71, 180, 181

market rules, 102, 115, 207

markets:

   central banks and, 101, 103–5, 109–12, 117–18, 120–1;

   credit-rating and, 149;

   firms and, 133, 159;

   ideology, 157, 158, 160–4, 168, 170, 173–5, 177, 178, 182, 188;

   impersonal trust, 3–5;

   media and, 43, 46;

   no solutions, 189–93;

   orthodox economics, 12, 20;

   trustworthiness, 122, 123, 126;

   unknowability, 3. see also City of London;

   Wall Street

Markowitz, Harry, 145

Marris, Robin, 25, 26, 66

Marxian economics, 2

Marxism, 165, 181

Maxwell scandal, 52, 127

McDonough, William J., 84, 85, 109, 110

McGraw-Hill Companies, 148

McLuhan, Marshall, 20

McNeill/Lehrer Show, 63

media. see financial media

Meeker, Mary, 59

Melbourne Herald Group, 52

Melzer, Thomas C., 84

memory, organisational, 87–90, 157, 161, 163

Menzies, Robert Gordon, 43

merchant banks, 3, 48, 56, 62, 95

mergers and acquisitions, 25–6, 157, 162, 167, 170, 173

Merrill Lynch, 49, 56, 65, 124–5, 156

Merton, Robert C., 103, 145, 146, 201

Mexico, 101, 148, 171

Meyer, Laurence H., 105

Midland Bank, 96, 98

Mieg, Harald A., 37, 68, 86, 118

Miller, William, 100

Minsky, Hyman, 5, 7, 12, 40, 41, 169, 184

Mirror (London), 47

MIT, 175

modernisation, 193–4

modernity, 20, 166, 167, 188, 194–201

monetarism, 115, 117, 162

monetary policy. see central banks

money:

   central power relation, 1–2, 3, 8, 12–14, 163, 165;

   commodification of, 12, 14;

   institutionalisation, 10–12;

   social relations, 6–10, 161, 162

Money Magazine, 129

Moody’s Investor Services, 19, 55, 136, 138, 148–9, 150, 151, 163

morale, organisational, 163–4

Morgan Chase, 56

Morgan Grenfell, 167

Morgan Stanley, 49, 50, 56, 59, 72, 173

Multilateral Agreement on Investment (MAI), 157–8

Murdoch, Keith, 52

mutual funds, 3, 58, 59, 77, 131, 142, 164, 175, 184;

   trustworthiness, 113, 121

Myrdal, Gunnar, 32–3, 37

NAB (National Australia Bank), 136, 147, 198

Nader, Ralph, 202

NAIRU, 115

Nasdaq (dot.com) boom and crash (2000):

   expert opinions, 14, 15, 172, 173;

   Federal Reserve and, 106, 110, 112, 114, 195;

   investment decision-making, 78, 90, 124–5;

   media and, 43, 44, 45, 46, 54, 55–8, 59, 62, 63, 65;

   pattern of crisis, 169

national and cultural differences, 89, 149;

   corporate law and regulation, 5;

   decision-making, 81, 83;

   financial media, 45, 58–60

National Australia Bank (NAB), 136, 147, 198

National Economic Council (US), 86

national interests, 73–5

Nationally Recognized Statistical Rating Organizations (US), 148

NatWest Bank, 96, 104, 105

neo-classical economics. see orthodox economics

New Deal, 1, 71, 95, 97, 131, 175, 188

New Economy, 13, 15, 44, 73, 77, 115, 120, 167, 186

New York. see Wall Street

New York State:

   Attorney General, 63, 124

New York Times, 46, 117, 123, 148, 173, 175

The New Yorker, 120

New Zealand, 65, 122, 162, 176, 188

news. see financial media

news values. see newsworthiness

Newsweek, 46

newsworthiness, 46, 47, 51, 53–4, 59

Nixon, Richard, 100, 162

Nobel Prizewinners, 37, 103, 163, 201

non-decisions, 79–80

Norman, Montague, 119

North America, 25, 50, 60. see also Canada;

   United States

numbers. see information

odium, avoiding, 114–16

OECD, 136, 157, 158–60, 161

Open Society Institute

opportunism, 32, 39, 40, 133–5, 157, 158, 163, 168, 171, 176, 181, 188, 197;

   presentness and, 170–1

organisations:

   impersonal emotions, 183–5;

   memory, 87–90, 157, 161, 163;

   morale boosting, 163–4

Ormerod, Paul, 36, 38, 165

orthodox economics, 1, 5, 6, 7, 186;

   agency theory, 23;

   calculating risk, 142–4;

   central banks, 12;

   emotions and, 18, 20, 35;

   future and, 28, 30;

   rationality and, 30–1;

   risk and, 34;

   uncertainty and, 2, 5–6

Ouma, Henry, 77–8

panics. see crises

Parmalat Finanziaria, 128, 142, 171

Parry, Jonathan & Maurice Bloch, 188

Partnoy, Frank, 72

Pascal, Blaise, 40

passions, 31

past data, 2, 64, 68, 133, 136, 139–40, 149, 152, 160

PBS, 45, 49, 63, 131

Peasant Revolutions (1524–25), 167

Penn Central Corporation, 148

Pennant-Rea, R., 14

pension funds, 113, 121, 156, 160, 178

personal decision-making, 80–2

personal dispositions, 68, 71–3

personality cults, 113, 118–21, 137, 157, 159, 160, 161, 163, 171–3, 186, 195;

   central banks, 101;

   media and, 51–6

Peston, Robert, 51, 52, 62, 139

Polanyi, Karl, 168, 188

political relations, 3–4, 43, 73–4, 175–6, 179. see also central banks, independence

Pollard, Sidney, 22–3, 138, 139, 140

Ponzi schemes, 40, 114, 120, 123, 124, 175, 183, 184, 185, 204, 207

Porter, Theodore, 135, 137–8, 141, 142, 143

post-industrial society, 14, 15, 20

Post-Keynesian economics, 41, 68, 73, 162

PR. see public relations

precautionary principle. see caution

predictions. see expectations;

   forecasting

present-ness, 68, 159–60, 164–70;

   opportunism and, 170–1

press. see financial media

prevention, 195

Princeton University, 99

private banks, 9, 10, 11–12, 100, 105, 109, 184

private sector:

   central banks’ credibility, 113–21;

   central banks’ relations, 94, 95–9;

   credibility, 121–2;

   investment decision-making, 77–9;

   non-decisions, 79–80;

   public organisations and emotions, 201–6;

   trustworthiness, 122–3

privatisation, 14, 178, 184, 204

probability:

   emotions and, 20, 36–40;

   risk, 35–6, 134, 135, 142, 144, 145, 146, 147

Profumo affair, 166

promises, 2, 6–10, 12, 20, 158, 183, 206–7

propaganda, 173–5

prudential regulators, 113, 124, 125.

   see also APRA; FSA; SEC; central banks (history)

psychology, 20, 36–7, 90, 91, 169

public relations (PR), 124, 125, 201;

   central banks, 94, 95–9;

   financial institutions, 3;

   media and, 44, 45–8, 56, 59–62

public sector:

   credibility, 121–2;

   decision-making, 73–4, 77, 79–80, 82–6, 92–3;

   non-decisions, 79–80;

   private organisations and emotions, 201–6

publics, financial media in trust to, 44–5

quantitative methods. see information

Quantum Hedge fund, 76

rage, 4, 15

Rand, Ayn, 162

rating agencies. see credit-rating agencies

rational choice theory, 34, 35, 37, 39, 134

rational economic man (REM), 18, 33, 186

rationality:

   accepting limitations, 185–7;

   emotions and, 1, 2–3, 5, 6, 17–42, 183–208;

   expectations and interest, 30–1;

   greed and interest, 31–2;

   risk and, 15

Reagan, Ronald, 60, 100, 101, 115, 116, 176

reason. see rationality

REM. see rational economic man

Renaissance, 8, 10, 32, 189

reputation:

   attribution struggles, 116–18;

   avoiding odium, 114–16;

   central banks, 94, 95, 101–2, 106–7, 109, 112, 113, 114, 115, 118, 120–1, 124, 180;

   decision-making, 85, 92

Reserve Bank of Australia (RBA), 14, 63, 73, 74, 75–6, 108, 149, 154, 206

Reserve Bank of New Zealand, 101

Rice-Davies, Mandy, 166

Ricoeur, Paul, 166, 179

risk:

   calculating, 15, 34–5, 142–4;

   greed and, 160–1;

   uncertainty and, 2, 35–6, 144–8

rituals, 83–5, 92

Rivlin, Alice M., 83–4

Roach, Stephen, 173, 179

Roberts, John, 197

Rogernomics, 162

Roosevelt, Franklin Delano, 24, 97

Rubin, Bob, 86

Rusnak, John, 78, 87

Russia, 76, 124, 167, 175

S & L crisis (1989), 102, 171

Salomon’s, 21, 173

Savings & Loans (S&L) crisis (1989), 102, 171

scandals, 6, 23, 52, 124–5, 126–7, 135, 174. see also Enron scandal (2002);

   Long Term Capital Management (LTCM) collapse (1998)

scepticism, 15, 45–8, 126, 135, 173, 185

Schadenfreude, 165, 168, 171, 195

Schiffrin, Anya, 47, 50, 58, 150

Scholes, Myron S., 103, 145, 146, 201

Schorderet, Georges, 78, 82

Schumer, Senator, 111

Schumpeter, Joseph, 6, 7, 10, 35, 207

Sears (company), 25, 26

sectional interests, 73, 74

Securities and Exchange Commission (SEC, US):

   accountancy firms, 127, 142, 196;

   credibility, 163;

   credit-rating agencies, 148;

   financial disclosure regulation, 50;

   government funding, 124;

   history, 24, 71, 95, 97, 141, 187, 196;

   initial public offerings, 57

self-interest, 23, 25, 30–1, 73, 74, 177

September 11 disaster, 1, 75, 186

Shackle, G. L. S., 5, 8, 32–3, 34, 37, 64, 134, 138, 141, 163–4

shame, 4, 5, 20, 118, 168, 175, 177

Shapiro, Susan, 24, 27, 28–30, 122, 202

share options, 24, 25, 26, 128–9, 171, 198–200

shareholders, 22, 24, 38, 45, 128–9, 141, 157, 158, 159, 178

Shepheard-Walwyn, Tim, 135, 140–1, 177, 178, 196, 197, 202

Shiller, Robert, 36, 38, 41, 43, 45, 49, 63–4, 148

shills, finance press as, 47, 59–66

short-term cycles. see cycles

Simmel, Georg, 7, 12, 187

Smith, Adam, 22, 138, 174. see also Adam Smith think-tanks

Smithin, J. N., 12, 28, 84, 162, 180

social movements, 157, 158–60, 161, 175–9, 182

social relations, 20, 38;

   of money, 6–10, 161, 162

socialisation, 71–3

sociology, 5, 12–14, 15, 25, 41, 68, 83

Solomon, Steven, 101

Soros, George, 76, 178

South America, 101, 165, 192

S&P (Standard & Poor’s), 19, 136, 148–9

Spain, 10, 101

The Spectator, 144

speculation, 3, 13, 15, 38, 43, 88, 90, 121, 157, 159, 163, 164, 169, 172, 190;

   central banks and, 86, 95, 110–12, 114–15;

   insurance and, 143;

   media and, 45, 59–62, 64, 161

Spitzer, Eliot, 124, 129

Standard & Poor’s (S&P), 19, 136, 148–9

statistics. see information

Steinberger, M., 173

Stiglitz, Joseph, 149, 168, 201

Stinchcombe, Arthur, 22, 141, 153

stock options, 24, 25, 26, 128–9, 171, 198–200

stockholders. see shareholders

strategic trust, 27–8

Stretton, Hugh, 14, 39, 162

success. see attributions; reputation

Sunday Times, 176

Sweden, 150, 188

Switzerland, 42, 48, 78, 81, 87–8, 89, 103, 109, 110, 123, 147, 150–1, 199

Sydney Morning Herald, 54, 55

Sykes, Trevor, 61–2, 150, 151

Syron, Richard F., 109

takeovers, 25–6, 157, 162, 167, 170, 173

taxation, 157, 190–2, 193

Taylorism, 138

Teeters, Nancy, 74

television, 45, 50, 51, 57, 58, 60, 63, 64, 92, 131, 173–5

Telstra, 126

Thatcher, Margaret, 60, 72, 97, 116, 156–7, 160, 175–6, 177, 180, 188. see also Conservative Party

Thomson Organization, 52

Tiffen, Rodney, 46, 47, 53, 54, 55–6, 62, 65

Time magazine, 46, 57, 168

Time/Warner Bros, 167

The Times, 53, 127

Tobin, James, 7, 10

Tobin Tax (Currency Transaction Tax), 157, 190–2

traders, 78–9, 89–90, 93, 196, 200

transparency, 156;

   central banks, 105

Treasuries, 9, 11, 43, 100, 113, 114, 118, 177, 201, 204, 205;

   Australia, 63, 152, 207;

   Europe, 76, 101, 106;

   United Kingdom, 11, 71, 73, 96, 98, 99, 101;

   United States, 86, 103, 108

trust, 5, 17–19;

   central banks, 11;

   expert opinion, 15;

   hierarchies of, 15, 113–32;

   media and publics, 44–5;

   in money, 2, 12;

   in risk, 133–56;

   strategic, 27–8;

   uncertainty and, 1, 2. see also impersonal emotions

Tversky, Amos, 37

Twain, Mark, 11, 143

UBS (Union Bank of Switzerland), 81, 88, 125, 147

uncertainty, 183;

   emotions and, 2, 4, 9, 15;

   interest and, 8;

   orthodox economics and, 1, 5–6;

   risk and, 35–6, 144–8;

   trust and, 4

United Kingdom:

   Labour governments, 96, 157–8, 162, 175, 200;

   rise of modern management, 22–3;

   Treasury, 11, 71, 73, 96, 98, 99, 101. see also Anglo-American financial world;

   Bank of England;

   City of London

United Nations, 190, 191;

   pension fund, 77–8

United States:

   Congress, 12, 13, 73, 74, 77, 91, 102, 103, 111, 112, 115, 118, 126, 130, 139, 195–6;

   financial media, 45, 50–1, 52, 53, 54, 57, 58, 59–60, 62, 63, 65;

   19th century, 22;

   Treasury, 86, 103, 108. see also Anglo-American financial world;

   Federal Open Market Committee (FOMC);

   Federal Reserve (US);

   Wall Street;

   Washington, DC

universities, 177, 201

University of California, 178, 187

University of Michigan Index of Consumer Sentiment, 153

unknowability. see uncertainty; expectations

utopianism:

   democracy and, 194;

   ideology and, 157, 159–60, 161–3, 185, 196;

   Mannheim and present-ness, 164–70;

   time-utopia, 157–82

Vanguard Group, 77, 129, 130–1, 195

Veblen, Thorstein, 6, 35

Vivendi, 126

Volcker, Paul, 72, 84, 100, 101, 105, 112, 115–16, 117, 120, 180, 181

Wall Street:

   accountancy, 127;

   blame, 123;

   data, 135;

   emotions, 89–90, 186, 189–90, 198, 200, 203;

   Federal Reserve and, 12, 54, 85, 99, 100–1, 104, 106, 109, 115, 116, 120–1, 195;

   firms and, 57, 72, 129;

   global networks, 95, 100;

   greed, 2, 160;

   ideology, 164, 167–8, 173–5, 179;

   impersonal trust, 97, 98;

   interviews, 42, 76–7;

   media, 58;

   political relations, 161;

   regulation, 97;

   scandals and failures, 24, 47, 56, 66, 103, 124–5, 129, 145. see also Great Crash (1929)

Wall Street Journal, 47, 49, 50, 51, 52, 54, 56, 62, 105, 117

Washington, DC, 41, 118–19, 121, 161

Washington Post, 57, 117

Weber, Max, 22, 30, 39, 40, 42, 139, 188

Welch, Jack, 137

Wilde, Oscar, 160

William III's Charter (1697), 10–11

Williams, Raymond, 181

Williamson, Oliver E., 28, 38, 40, 133–4, 135, 142, 144, 171, 196, 197

Wolfe, Tom, 168

Wong, Chia Sieu, 76–7

World Bank, 95, 136, 150, 177, 178, 191

World Economic Forum, 175

World Trade Organization (WTO), 136, 157, 178

WorldCom, 128, 139

WTO (World Trade Organization), 136, 157, 178

Y2K, 195

Young J. J., 139

Ziegler, Dominic, 50, 118–19, 125–6, 144, 150–1, 170, 205

Zuckerman, Ezra, 56–7, 165