New Business Book Summary Available for The Power to Compete

Japan must make bold moves to reverse its economic stagnation, economist Ryoichi Mikitani and Internet entrepreneur Hiroshi Mikitani write in The Power to Compete. They do not believe that Abenomics, the economics program led by Prime Minister Shinzo Abe, does enough to solve Japan’s problems. Instead, the nation needs to increase its competitiveness, efficiency, and innovation by lessening government regulation, eliminating layers of bureaucracy, moving away from Japan’s lifetime employment tradition, and cutting taxes and the costs of government. The authors also argue that making English the business language of Japan, liberalizing rules governing foreign workers in Japan, and allowing foreign companies to take over failing Japanese businesses would help boost the nation’s economy.

New Business Book Summary Available for How the Stock Market Works

In How the Stock Market Works, financial journalist Michael Becket provides an informative look at the key elements of the stock market, with a focus on Great Britain. From basic definitions of stocks, bonds, derivatives, and alternative investments to advice on how to analyze financial opportunities, Becket provides the tools necessary for novice investors to enter the stock market with confidence.

New Business Book Summary Available for Return to Prosperity

Economic policy in the United States tends to be driven more by irrational fears and misconceptions than by sound economic principles. This behavior presents a considerable threat to the country's ongoing economic health. In Return to Prosperity, economics experts Arthur Laffer and Stephen Moore discuss the state of America's economy and offer their proposals for how America can again become an economic superpower.

New Summary Available for The Ten Trillion Dollar Gamble

The U.S. budget deficit represents a major risk to the health of the American economy. In fiscal year 2010, the deficit was around $1.3 trillion. Experts believe that by 2020 the national debt will more than double from these levels. In all likelihood, tax rates, inflation, and interest rates will increase. In light of these developments, investors must reexamine their strategies and develop new plans for taking advantage of the new economic environment. In The Ten Trillion Dollar Gamble, Russ Koesterich offers advice on how individuals can adjust their investment portfolios to protect their financial well-being.

New Summary Available for Standing on the Sun

The world is constantly evolving and, along with it, the capitalist system is also changing. In  Standing on the Sun, Christopher Meyer and Julia Kirby discuss how capitalism is morphing from the pursuit of financial gain to the pursuit of value. Many of the modifications to traditional rules of capitalism are occurring in emerging economies. The authors explain the factors driving the renaissance of capitalism and how different varieties of this economic system are developing around the world.

Arun Motianey believes that the last 125 years constitute the “age of the SuperCycle,” a period of rolling booms and busts in the global production pipeline. Hopes of price stability spur price movements that begin in the commodity sector, travel through the manufacturing sector, and end up on household balance sheets in consumption economies. In SuperCycles, Motianey delves into the past to examine the workings of the global economy and build a case for his theory. He provides a comprehensive overview of the theory, three possible scenarios for the future (deflation, inflation, and stagflation), and some salient investment tips for a world in which the SuperCycle reigns supreme. He encourages analysis of historical trends and information, detailed investment planning, and smart policy work. However, he warns that the future will not be an easy one and that it is best to start preparing now.

Animal Spirits and Their Effects

Animal Spirits dissects standard economic theories and demonstrates their failure to account for human emotions, even though emotions have a large impact on the economy. Traditional economic theory operates under the assumption that individuals act rationally and make economic decisions based on purely economic reasons.

These economic theories are widely accepted by professional economists and are utilized in governmental policy-making. Unfortunately, traditional economic theory does not examine how the economy behaves when individuals make rational decisions based on non-economic reasons, irrational decisions based on non-economic reasons, or irrational decisions based on economic reasons.

In the quest to make economics a more scientific and calculable study, economists have largely left out the single largest influence on the economy: the animal spirits of human emotion. All animal spirits fall into one of five different categories: confidence, fairness, corruption, money illusion, and storytelling.

All of these categories have strong effects on the current economy, and their influence must be taken into account when creating government policy and making economic predictions. Ignoring the fact that human emotions affect purchasing and financial decisions only serves to create policy that will not hold up to these constantly-changing animal spirits.

By accepting and understanding these emotions, however, economists and policy makers can create more effective policies and plans. These policies and plans will not be permanent, however, and should change according to the cultural, economic, and emotional climates of the time.

For example, when banks stopped becoming mortgage holders and just became mortgage initiators, policy did not keep up with this change. Traditionally, banks would approve individuals for mortgages and then hold the mortgages themselves.

Because they held the mortgages, it prevented them from writing mortgages that people could not afford because they did not want to end up with the property or losing out on mortgage payments. Then, in the 2000s, banks began to sell the mortgages they had to other financial institutions.

These financial institutions did not know about the fiscal standing of the mortgages they held because the banks had divided individual mortgages into parts and sold the different parts to different institutions. Because of the large signing fees the banks earned when they approved individuals for mortgages, and the fact that they planned on selling the mortgages after they were signed, the banks approved people who could not actually afford them.

Because policy did not take this into account, the real estate bubble grew and eventually crashed once the individuals who received mortgages they could not afford began to have their homes foreclosed upon. This is just one example of the many ways in which animal spirits can affect the economy.

This article is based on the book "Animal Spirits." The book summary is available online at Business Book Summaries.