At a time when most investors feel the stock market has been anything but equitable, Smith shows how global equity, or stock, markets have become one of the most powerful—and least understood—economic forces on the planet. Although similar to Smith's earlier Toward Rational Exuberance, the book details the increasingly interconnected and volatile nature of international capital flows. For example, when Thailand's economy stumbled in the late 1990s, it set off a chain of economic events worldwide that President Clinton termed "the worst financial crisis in fifty years." Reviewing the history of stock markets across the globe, Smith shows that booms and busts based on international speculation are nothing new. For instance, the dangers of price fixing were well known to the Ducal Council in 15th-century Venice, which passed the first insider trading prohibition ever. And the infamous South Sea Bubble of 1720, which rocked both London and Paris, provided ample evidence that speculation abroad could bring ruin at home. Despite these ups and downs, equity markets are attracting investors across the globe. Individual stock ownership doubled in Germany between 1997 and 2000, and there are more than 70 million individual stock accounts open in China. These investors, in turn, are changing the way the world does business. Japan's lifetime employment traditions, Germany's stakeholder capitalism and Indonesia's crony capitalism are all being pressured by stockholders to do business the way Americans do. Smith's clear analyses of historical and recent economic events show that whatever their prices, stocks, globally, are on the rise. (Aug.)
