Galbraith's account of the 1929 crash is gripping, and reads more like the work of a slightly-removed journalist than an economic historian. Discussions about discount rates and public pronouncements are interwoven with samples of other news of the day-- Lindbergh's flight across the Atlantic, the skylarking of stock clerks in Central Park, etc. The effect is to place the reader inside the world of 1929 just as the rug was being pulled out from under him.
No one who has been paying attention to the events of the past three years can fail to see disturbing similarities between the market crash of 2008 and 1929. Why, therefore, was the same dynamic allowed to play out? Galbraith explains from 1954 with an eerie prescience:
"The market will not go on a speculative rampage without some rationalization. But during any future boom some newly rediscovered virtuosity of the free enterprise system will be cited. It will be pointed out that people are justified in paying the present prices-- indeed, almost any price-- to have an equity position in the system. Among the first to accept these rationalizations will be some of those responsible for invoking the controls. They will say firmly that controls are not needed. The newspapers, some of them, will agree and speak harshly of those who think action might be in order. They will be called men of little faith."
The sheer succession of parallels between 1929 and 2008 are mind-numbing:
* a dangerous amount of financial leverage propping up asset prices
* A pyramid effect in which each actor along the economic chain benefited by cooperating in the fraudulent scheme
* Endless 'preventive incantations' from public officials and bankers that the worse was over, when the worse was still to come
* The unearthing of shocking frauds like Bernie Madoff and Allen Stanford-- the modern descendants of Richard Whitney and Charles E. Mitchell
* A barely-concealed hostility for Washington by Wall Street, the latter taking the former to task for its apparent idiocy in not being able to follow the subtle machinations of the high finance
* The destructive knee-jerk tendency of politicians to rush to exactly the wrong solution: espousing the immediate need for a balanced budget, despite the fact that taking this to its logical conclusion would prevent government from doing the very things necessary to get the economy moving again (ie. cutting taxes and increasing spending)
* The merciless chain-reaction of margin calls and stop-loss orders which, together, greatly accelerated the downward plunging of stock prices
* The role of academics in providing a veneer of legitimacy to various ill-conceived schemes (one immediately calls Long-Term Capital Management to mind)
* The seduction of traditional watchdogs, mentioned in Galbraith's words above. While today we look to credit ratings agencies like Moody's, Fitch's, and Standard and Poor, in 1929, the public looked to the banks, which abandoned their role as financial gatekeepers and worked around the clock to convince ordinary Americans why they should place all of their money in the stock market
* The haughty dismissal by the financial press-- especially The Wall Street Journal-- of anyone who would challenge its rosy financial outlook ("Why is it that any ignoramus can talk about Wall Street?", it opined in response to market naysayers in pre-crash 1929)
One is justified in asking how Alan Greenspan's Federal Reserve Bank and George W. Bush's White House could proceed along so destructive a path with so rich history before them.
Galbraith offers at least this hope for the future, however: the unlikelihood of another asset bubble in the immediate future:
"...a speculative outbreak has a greater or less immunizing effect. The ensuing collapse automatically destroys the very mood speculation requires. It follows that an outbreak of speculation provides a reasonable assurance that another outbreak will not immediately occur. With time and the dimming of memory, the immunity wears off. A recurrence becomes possible."
One must wonder, however, whether this pronouncement remains valid in an age of compressed historical timelines in which the lessons of one generation are only partially-learned before being inadequately passed down to the next.
"The Great Crash 1929" is an immensely engaging book which will cause the reader to shake his head in disbelief as passage after passage finds resonance with the events of recent years.
Enjoy fast, free delivery, exclusive deals, and award-winning movies & TV shows with Prime
Try Prime
and start saving today with fast, free delivery
Loading your book clubs
There was a problem loading your book clubs. Please try again.
Not in a club? Learn more
Join or create book clubs
Choose books together
Track your books
Bring your club to Amazon Book Clubs, start a new book club and invite your friends to join, or find a club that’s right for you for free.
Download the free Kindle app and start reading Kindle books instantly on your smartphone, tablet, or computer - no Kindle device required.
Read instantly on your browser with Kindle for Web.
Using your mobile phone camera - scan the code below and download the Kindle app.
Follow the authors
Something went wrong. Please try your request again later.
Frequently bought together
$13.49
Get it as soon as Sunday, May 12
In Stock
Total price:
To see our price, add these items to your cart.
Choose items to buy together.
Similar items that may ship from close to you
Page 1 of 1 Start overPage 1 of 1
Top reviews from other countries
Peter de Toma sen.
Lessons for financial crisis management in the 21st century
Reviewed in Germany on November 1, 2014