5 comments about Essays on the Great Depression.

1. Bernanke rigorously explains the economics of the Great Depression. A massive monetary contraction (reduction in the money supply) was the cause of the Great Depression, in large part due to the flawed gold standard that was created following World War One. The massive banking collapse (due to weak regulation) further worsened the disaster. To a lesser extent, the Smoot-Hawley tarriff contributed to the cause. Sticky wages and other factors contributed to the slow recovery.
   
   Bernanke first shows that the countries that abandoned the gold standard the soonest, such as Britain, were the ones that recovered the quickest. The countries that clung to the gold standard the longest, such as France, were the ones that suffered the longest. The countries that were not on the gold standard - perhaps using the silver standard - avoided the Great Depression!
   
   Due to the gold standard and other misguided judgements, the Federal Reserve constricted the money supply again and again. The gold standard caused a run on the gold supply, followed by further Fed tightening of the money supply to defend the currency, leading to widespread bank panics, which constricted the money supply further due to the sharp drop in bank loans and the loss of consumer confidence in the financial services industry, which was hardly regulated.
   
   The economic crisis was made worse by the massive banking collapse. Thousands of undercapitalized banks went insolvent, and thousands of people lost their savings. Bank panics swept across the country. Other banks refused to make new loans for fear of loan default. The banking crisis resulted in a further contraction of the money supply. The banking industry completely collapsed at the end of Hoover's presidency.
   
   Sticky wages also contributed to the depression, although not as much as Keynesians think, according to Bernanke. Hoover and FDR may have made this worse by trying to maintain and increase the spending power of workers, although the counter argument is that this increased worker spending power increased spending and demand. The book examines many other factors too numerous to list in this review. This is the best book on the economics of the Great Depression.
   
   Once taking office in 1933, Franklin Roosevelt quickly removed America from the disastrous gold standard (which previous administrations would never have done) and FDR saved the collapsed banking industry. Recovery followed. According to Bernanke, industrial output in America grew 5% per quarter from 1933-37. Per quarter. Real wages grew substantially. Productivity grew substantially. Unemployment dropped.
   
   Bernanke says that Franklin Roosevelt's New Deal era of 1933-37 achieved strong economic growth by several different measurements. FDR reversed the contraction in 1933, so technically the depression ended in 1933. GDP grew over 50% in four years. This period of high growth was interrupted by a severe recession in 1937-38, which was followed by more high growth. According to Bernanke, "Quarterly growth rates for manufacturing employment, hours, and input in 1938-40 were 1.8, 2.8, and 4.9 percent, respectively."
   
   I used a pencil to highlight the conclusions in this book. A massive amount of rigorous economic data is included, so only an economist will understand everything, but anyone can understand the conclusions. Bernanke inserts summary sentences so anyone can understand the conclusions. Highest recommendation.



2. Overall Bernanke does a good job at looking at different theories, but his theories on the dangers of deflation have been refuted by many authors. It is too bad that this theory clouds his vision, or else his treatment of the depression would have a lot more authority.
   
   For the economist, I would highly recommend "America's Great Depression" by Murray N. Rothbard. He is by far the most thorough in his treatment of the period, delivering the most compete and well founded theory for the cause of the Great Depression, too bad Bernanke hasn't read it.



3. The Federal Reserve made the Great Depression almost inevitable when it inflated the money supply. The Fed inflated the money supply before it contracted it. With a true, pure gold standard, this initial inflation never would have been possible. Everything else about the contraction, corrections, tariffs, etc. would have been a moot point, and we wouldn't have had a great depression. Serious recession with some of the other bad decisions, maybe, great depression, nope.
   
   To claim that the gold standard caused the great depression is shady, lawyerly logic indeed--no matter how many reams of mathematical data you distort to fuzzy the matter, it just doesn't jibe.
   
   It all began with rampant inflation (increasing the money supply, ie printing or creating more paper money without a corresponding increase in gold, silver, or real goods and services. As more goods and services aren't created at the same instant new money springs into existence, prices should rise in proportion to the newly created money, but most people don't realize this is what is happening. They mistake the extra money for wealth (additional goods and services, or shifts in demand), and make illusiory assumptions/decisions that are later corrected.) It all began with rampant inflation by the Fed--the primary occurence a gold standard prevents. Period.
   
   Most everything else is just goobley-gook by the rich to keep the poor duped and ignorant, and by corrupt social engineers who fancy themselves do-gooders. There are problems with gold standards, especially when some countries have honest gold standards, others countries don't, and their currencies and goods are exchanged freely, BUT these are far outweighed by the problems and wealth redistribution to the rich created by fiat money systems. Period.
   
   It serves the ultra-wealthy, and proponents of big government and socialism and collectivism, to dupe people about currency reform. Saying the gold standard caused the great depression is like saying raw vegetables cause heart attacks, or breathing clean mountain air causes lung cancer. To claim that the very thing which would have prevented a great depression is the cause is extremely audacious, and supremely sinister, but hardly surprising.
   
   When you are on a gold standard, and you inflate the money supply (ie, create more dollars out of thin air, or simply print more), of course there is a run on gold. This is what the gold standard is supposed to do! The gold standard will prevent governments from printing additional money, by calling their bluff (ie, making them honor their commitment to exchange each dollar for a fixed weight (not monetary value, but weight) of gold). If the government keeps printing, people keep redeeming money, they run out of gold, and the scam is up. In an honest gold standard, this isn't attempted, people know the gold is there, and they simply use the money for its intended purpose--to store value and trade.
   
   When money isn't tied to gold or a commodity, the government prints more, spends it, and each citizen holding money is taxed because their money is reduced in value so that the new money has value. No tax collectors are needed, but this is a bad way to tax because altering the money supply distorts the price signal that is the backbone of the marketplace. The crafty can speculate against these distortians, picking the pockets of honest working class people who, without realizing it, are paying a hidden currency tax.
   
   If banks hadn't commited fraud by circulating money not backed by assets, they wouldn't have failed. The massive banking collapse was fraud being realized, and the accounts being cleared. It sucks that so many middle class people took it on the chin, but the lesson is that we need honest banking in which more money cannot be created out of thin air, and contracts are honored, and liabilities on the ledger cannot be magically converted to assets, and pyramided ad fraudem. One more time: If the Fed hadn't inflated the money suppy, there wouldn't have been a depression. If there had been a pure gold standard, the Fed wouldn't have been able to balloon the money supply. Period. To simply begin halfway into the story by starting with the contraction is unfathomably dishonest.
   
   Countries can get screwed just like people in this system, especially those countries with honest money who can't print it out of thin air like non-gold-standard countries. If they aren't aware how much new money is printed, their imports/exports can suffer, and they end up conducting transactions for depreciating paper currency that ultimately screws them by declining in value faster than they realized, fall prey to gold speculation or price instability, etc. But placing primary blame on the gold standard is absurd. Its like saying the guy that left his house unlocked is guilty of felony robbery when all his possessions are stolen. The thief is the problem, not the gullible or un-streetsmart homeowner -- though he should certainly be wiser and limit his interactions with criminals (fiaters). The corrupt money was the problem, not the honest money. THe fiat system of currency printing was the problem, not the gold standard.
   
   "Undercapitalized". What a cozy euphamism. You mean a bank that fraudulently pryamided assets, misrepresenting time deposits as demand deposits?
   
   In an honest gold standard, a disastrous contraction of the money supply is not a worry, as it is never inflated disastrously, so a house of cards is never created in the first place.
   
   Roosevelt saved the banking industry. What a hero! In English, he perpetuated the fraud, and shifted the cost for all the banks' fraudulent contracts it couldn't honor immediately, but should have been forced to long term, to the people. Then he allowed the fraud to continue. Robin Hood in reverse. What a role model!
   
   All the rest is expected. After the correction, inflation was much more modest, meaning intervention in the marketplace via distorted price signals was much more modest, meaning citizens not machinated by corrupt currency did what they will usually do--busted butt and created prosperity.
   
   Many rigorous economic studies churn numbers, and then try to assign causes or meanings to those numbers, without truly assessing/considering what the numbers mean in terms of actual human behaviour, especially in terms of fundamental causalities that lead to the data. This is one of Rothbard's main problems with conventional economics.
   
   Read Rothbard's book for a real explanation of the Great Depression much more elegant and less scathing than mine. As long as propaganda like this masquerades as truth, the common man's freedom and standard of living will continue to decline.
   



4. Bernanke is ,unfortunately,ignorant of the preventive medicine approach to Bubbles and Depressions first postulated by Adam Smith in 1776 in the Wealth of Nations and then reapplied by J M Keynes with the additional analytic conclusion emphasizing the importance of clearly differentiating between tolerable security (risk)and uncertainty.
   Smith made it straightforward and easy. There are four categories of borrower to whom commercial and Wall Street investment banks can make loans available to-the prodigals,projectors,imprudent risk takers,and the sober people.The task of money and banking policy is to prevent loans from being made to the prodigals,projectors(Keynes's speculators of chapter 12 of the GT,1936),and imprudent risk takers(dealt with by Keynes in chapter 11 with his lender's risk versus borrower's risk distinction).Economists don't seem to get it.Neither do Fed chairmen.Allow the capital markets to be dominated by leveraged buyouts and hedge fund speculators guarantees that the inevitable bubble will be created.The only question that remains is whether or nor some type of bailout will prevent a panic and crash.This type of money and banking policy allows the problems to be created and then attempts to prevent the problem from mushrooming into a serious recession or depression.
   
   Smith's advise to Bernanke and his coauthors would be to, first, fix the rate of interest permanently a little bit above the prime rate and then maintain it at that level for the long run and ,second,only permit loans to be made to the sober people.Otherwise,periodic financial crises will occur. It's as simple as that.None of the essays deal with the fundamental goal of banking policy-Prevent the problem from arising in the first place.Of course,if you believe in the Efficient Market Hypothesis fairy tale, where all price changes in financial markets are normally distrbuted,as does Bernanke,no problem is supposed to occur.But they do.



5. Anyone can spin a story about anything using the various mumbo-jumbo parts of mainstream economics. Bernanke here has decided to ravage the gold standard. Suffice to say, it is extremely tedious, banal, and antithetical to common sense.
   
   Ludwig Von Mises predicted the Great Depression in 1919.
   
   Here's two easy steps to understand the real cause of the crash.
   
   1. Read Murray Rothbard's America's Great Depression
   2. Google "Benjamin Strong", the first Federal Reserve chairman who served until his death in 1928. Bernanke does not mention Strong at all. You will find almost all the answers in Strong's tenure. For the severity and length of the recession, please read Jim Powell's "FDR's Folly".

5 comments about The Wisdom of Crowds.

1. The author's thesis is that the answers of huge numbers of people tend to be more accurate than those of individuals even if these individuals are experts in the specific subject. He makes clear that this is not true for any specific trial in which one individual might score better than the average, but in a series of trials, the crowd outperforms any individual. The author also explains "magnification " of mistakes by peer conformance, a phenomenon that does not occur when the answer comes from a random crowd. Results from crowds or groups should be averaged and not "consensed" in order to obtain unbiased results.
   
   In general I found the author's thesis quite interesting. During an exercise in class on peer conformance, we have seen, how the group's consensus gave a worse result than the best individual answer. Thus I agree with the author that peer conformance is not generating the best results. On the other hand, I doubt that this approach would work with more complex things than assigning magnitudes like weight, value, size, etc. to a common item. I do not believe that this method would come up with a cure for cancer or even assigning a magnitude like mass to a not so well known object like for example a W boson or a quark. It would also be interesting to find out if the crowds can predict the energy at which the 3 forces of nature unite (or even the four forces, including gravity).
   
   All in all a good book.



2. Hee, hee, hee! This title and this book sure look funny right now (September 22nd, 2008). Do we follow the wisdom of the crowds on Wall Street (which, if left to its own devises will continue to drive financial titans into bankrupcy), or the machinations of the dubious experts (Paulson & Bernanke), who will put us on the hook for hundreds of billions for years to come?
   
   Maybe it's time to dust off that 19th Century classic "The Madness of Crowds" instead of reading this smug balderdash.



3. I love books that take a new and unique idea, thoroughly research and expand the idea, and then present the findings in an entertaining, though-provoking way.
   
   The Wisdom of Crowds is one such book. Other recent titles that have achieved the same type of cult following for presenting unique hypotheses include The Tipping Point, Blink and The 4 Hour Work Week.
   
   You know the old saying, if you always do what you've always done, you'll always get what you always got, and in the current turbulent economic and socially challenging times, this could not ring more true.
   
   Surowiecki presents a unique concept that the collective thoughts of many will always be smarter than the elite few. He delves deep into this concept, and presents scenario after scenario for which this hypotheses holds true. The arguyment is compelling as it is entertaining and is hard to refute with all the evidence set forth.
   
   Even if you disagree with the central theme, you'd be hard-pressed to say that you didn't find this book an entertaining read. The examples used to support his case alone are entertaining, educational and thought-provoking.
   
   We really do need forward thinkers like Surowiecki to help look at the world's problems from a differing perspective. I really do look forward to Surowiecki's next book.
   
   A great read!
   
   Leigh Burke
   Author of Niche Internet Marketing
   
   NICHE Internet Marketing: The secrets to exploiting untapped niche markets and unleashing a tsunami of cash



4. I read this for a MBA class. Out of the stack of books assigned, so far, this is the only one I liked. It is relevant to today's curious questions of how to get crowds engaged, how crowds behave, and why we even care.
   
   I'm trying to teach people to work collaboratively together at work. They "think" they already are doing this but the author gives me new ideas on how to further their participation in team work. I find that in corporate america, people contribute mostly in their assigned role. "I am a business analyst so I don't give my 2 cents when solutioning". Yikes it drives me crazy that they put their single hats on then multi-task when we start talking about something that isn't their specialty.
   
   Anyway, I underlined something on every other page which is a sign that I found this useful and something I will want to learn to apply.
   
   Did I mention how good a writer this guy is?



5. I borrowed this book from the local library. I just finished it yesterday. It is a really quick read. I liked how the author used "real world" examples to illustrate his point. I plan to apply many of these techniques into my own business.

5 comments about The Panic of 1907: Lessons Learned from the Market's Perfect Storm.

1. Financial history is fascinating precisely because it documents simularities with the present, even while the products or organizational mechanisms of the time are different; this book is great for this moment of credit contraction and fear in the 21st century, a hundred years after the documented events.
   
   Reading about JP Morgan (the person) meeting with the various bank and trust company heads, and bringing in Teddy Roosevelt as he felt relevant, reminded me both of the behind-doors funding conversations in 1998 that kept the Long Term Capital disaster from spreading (see When Genius Failed, by Roger Lowenstein), and made me think of Tim Geithner, head of the NY Fed, and Henry Paulson, Treasury Secretary, working with JP Morgan (the firm) in the spring of this year (2008) to contain the blow-up of Bear Stearns.
   
   Timelines aren't always tight, and the historical material is a lot more limited that what Roger Lowenstein had to work with, but it is still a very compelling story and appropos comparison to the present. Interesting also is the international elements of gold movements to contain the unfolding crisis of credit/confidence.



2. If you compare the 1907 crisis that struck U.S. and European financial institutions with 2008's economic emergencies, you will discover striking similarities. (In fact, the uncanny parallels have made this fascinating book a bestseller.) Strong interconnectivity between financial firms meant that trouble at one migrated to others. Both crises involved serious credit and liquidity concerns. Both provoked populist attacks against Wall Street. In part, the trusts hit trouble in 1907 because of insufficient regulation. The 1907 crisis started on Wall Street, and quickly jumped to European institutions. In 2008, the trajectory was even more global. Of course, marked differences also separate these episodes. In 1907, fabled financier J.P. Morgan exercised remarkable leadership to end the crisis, and to reassure depositors and investors that their savings and equity holdings were secure. Morgan calmed the waters so the panic would not spread. "This is the place to stop this trouble," he said of the Trust Company of America. Robert F. Bruner and Sean D. Carr explain why the 1907 panic occurred and use it as a valuable case study for understanding other monetary crises. getAbstract is confident that history lovers, businesspeople, financial executives and anyone who enjoys a well-told, real-life drama will love this book.



3. This is a clear, concise book that gives an overview of the Banking Panic of 1907. The most useful part of the book for me was the glossary as the authors define such words as "bank panic", "stock market crash", and so on. We hear these words every day, but never have a clear definition of them. The Panic of 1907 seems very similar to what is happening in the credit crisis and money market/hedge fund panics of today, except they are on a more global scale. My one complaint is the book was too short and, therefore, skipped some of the detail I was looking for. Overall, this is a great book and will help people without a financial background understand what happens during a panic and what steps need to be taken to stop the panic.



4. Most people reading books on finance, particularly historical books, aren't really expecting something highly readable by a layman. That is where this book is quite surprising. It flows very nicely and quickly. It visualizes events of the day very well. To be clear, this book focuses quite closely on the events immediately preceeding, leading up to and mostly during the crisis in October-November 1907. Some discussion is done of the aftermath and results but it really focuses and puts you in the meeting rooms with the people making the decisions at the time they were happening. Some space is given to the aftermath and addressing the causes but it really does a spectacular job of actually walking through the events that occurred as they were perceived. What is thought provoking is how eerily similar some attributes of this moment in history are to today. Particularly as Bruner and Carr walk you through the cascade of one institution disintegrating after another and as the events unfold to cascade wider and wider in scope. What exacerbated the events of the day, liquidity evaporating, is very much what is driving and exacerbating more recent events. The authors do seem a touch fond of J.P. Morgan and how he handled the crisis and do focus quite a bit on this. However, the facts are what they are. Had there been no J.P. Morgan to step in, one wonders how differently things may have unfolded. This book is highly readable and flows quite smoothly and quickly and is very enlightening.



5. While the book certainly has some weaknesses, it is still a remarkable and readable one, providing very interesting perspectives on credit crises.

5 comments about The Great Inflation and Its Aftermath: The Past and Future of American Affluence.

1. Robert Samuelson is a journalist, not an economist. But his writing on economic issues makes him sound, to my ear, like an economist. Samuelson's columns in the Washington Post often catch my eye, and I have read many of them. Until I read this book and saw Samuelson's brief biography, I thought he was an economist.
   
   But Samuelson has a way with words that marks him as a journalist. When I saw a Newsweek article by Samuelson based on this book, I thought the book worth a read. It is indeed. Samuelson looks to economic history, in particular the "great inflation" of the 1970s, for lessons that it teaches us about today's world.
   
   In fact, Samuelson believes that the roots of the current credit crisis are firmly planted in the great inflation. That is, that the "disinflation" we grew to enjoy as the great inflation was brought under control led us into bad habits that have finally come to roost.
   
   I won't summarize the book here. If you want a good summary, the Newsweek excerpt that Samuelson himself wrote does a better job than I can. The core of the book is there. To get much more, you have to read the book.
   
   And I encourage you to read the book. Samuelson sometimes has the air of a didactic "know it all." Maybe that comes with the territory when you are a columnist (not a self-doubting profession) for both the Washington Post and Newsweek. That air can annoy -- it did annoy me a bit in this book. But it has not kept me from benefiting from Samuelson's work.
   
   Be warned, though. Samuelson says he wrote this book for the general reader. Readers without an interest and some background in economics may find the book tough going. It's not a collection of columns. It's an in-depth economic history and analysis. At times it can be difficult. Even dry. I must confess that I skipped over parts that seemed not worth the trouble.
   
   Yet I do recommend the book. There's little question that we face some troubled economic times. As Samuelson points out, much of it is perception rather than reality. Samuelson's book helps put the problem into an historical perspective. That helps. The main thing to fear may well be fear.
   
   Fear can be deadly. Yet a book about cancer can sometimes help someone just learning that they have cancer deal with the fear. Learning facts and thinking logically can combat emotion. Reading about what we are facing as Americans, and learning more about the great inflation era, may help us shrug off the despair and get to work on the nation's financial problems.
   
   Samuelson's book helped me do that. I hope the book will help other readers do that as well.



2. There is no economist - that I am aware of - writing for a weekly magazine (Newsweek) and daily newspaper (Washington Post) that is more objective and nonpartisan than Robert Samuelson. Not only does he avoid promoting either Republican or Democratic economic policies, he is very critical of both.
   
   In this book, he talks about the great inflation, which many of us remember; and the lessons learned, which many of us have either forgotten or never learned in the first place. The great inflation of the 60s and 70s was, according to Samuelson, the result of misguided attempts by the government to keep artificially high levels of employment, and to keep the economy from falling into recession. Lyndon Johnson's Great Society programs were instrumental in creating a wage-price spiral that didn't end until 1980 when Ronald Reagan was elected. Even Richard Nixon could not stop the spiral with the imposition of a wage-price freeze. Nixon too was guilty of tampering with the system by urging the Fed chairman to keep the economy out of recession. During Jimmy Carter's presidency inflation was running at 14 percent and there was indeed an economic malaise. These inflationary times should be duly noted by the incoming Obama administration as many of the advisors are speaking urgently about applying big Keynesian stimulus packages.
   
   When Ronald Reagan came into office he did a very brave and politically unpopular thing: he urged Paul Volcker, the Fed chairman, to raise interest rates and tighten credit in order to kill the inflation beast. (One of the few compliments I have for Ronald Reagan.) This precipitated the most severe recession since the Great Depression, but it did succeed in halting inflation. The recession lasted almost two years, but it paved the way for the almost uniterrupted economic growth that we've enjoyed for the last 25 years.
   
   The aftermath could also be called the great deflation since inflation was kept under control by a fairly strict monetary policy. What escaped the monetarists' control, however, was the amount of debt that followed from their policies. (On this topic, read also George Soros' The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.) The amount of public and private debt soared to unimaginable heights during this period, especially the last 8 years. During this period everyone - government, corporations, and consumers - lived beyond their means, running up debts that are now drowning the economy in a sea of red ink.
   
   It is predicted, by Samuelson as well as many other economic journalists, that we are now entering an age of less affluence or even scarcity. As we reorganize ourselves more toward production and saving rather than borrowing and spending, we will feel much less affluent than during the years of living large. This restructuring process will be drawn-out since our priorities have been distorted for such a long period of time.
   
   Samuelson warns against new bailouts and stimulus packages in view of the damage they caused in the 60s and 70s. This is in sharp contrast to what Paul Krugman advocated in a recent New York Times article entitled "Depression Economics Returns". Krugman argued that we need much larger bailouts; better to err on the side of doing too much than too little. As evidence he reminds us that the public works project known as World War II was the biggest and most successful bailout in our history. He argues that now, as then, we are so far gone that the caution Samuelson advocates is no longer appropriate, it would indeed make matters worse. The incoming Obama administration will have some tough choices to make, and the wrong ones will be catastrophic.



3. Samuelson has a point. The point is this: "We are headed for serious a readjustment of the dollar!!!!!!!" We have undermined the current value of the dollar. You can't really argue with that statement, its clear. In our lust for material goods, we have worked to hard to make sure that credit was cheap and easy to obtain. The result? The need to issue more money, so we could cover our nation's obligations. It is a problem, one we are just getting ready to face,.



4. Robert J. Samuelson asserts in this book that the last half-century has been one long economic cycle dominated by the rise and fall of inflation.
   
   Inflation surged in the 1970s, after many years of economic policies designed to smooth out business cycles and to keep unemployment as low as possible, even at the risk of higher inflation. Fighting inflation was not a top priority in the presidencies of Nixon and Carter. Samuelson believes that Ronald Reagan would not have been elected president had there not been double-digit inflation during the Carter years, and also believes that Reagan was the only president who would have allowed Fed chairman Paul Volcker to raise interest rates to the extent necessary to minimize inflation.
   
   The author demonstrates that the taming of inflation led, in the following years, to milder and briefer recessions, globalization, and the boom in stock prices and home prices. However, while economic growth was robust in the 1980s and 1990s, jobs were not as secure as they were in the 1950s and 1960s.
   
   Samuelson believes that the half-century economic cycle defined by inflation is ending, and speculates about what might come next. He compares the present moment to the late Fifties, just prior to the rise of inflation in the Sixties, and discovers many similarities. He offers his opinions on what should be done for the economy (starting with, of course, controlling inflation) in the coming years.
   
   Hopefully, the incoming administration will favor a strong currency and resist the temptation to implement more and bigger social programs, which would stifle economic growth. It is heartening to see that Paul Volcker is one of Barack Obama's economic advisors.
   
   This timely book is a groundbreaking study of how inflation affected not just the economy at large, but the lives (and psychology) of ordinary Americans over the last fifty years. There are also a couple of really cool appendices containing statistics about GDP, inflation, unemployment, and business cycles since 1950.



5. If, as Robert J. Samuelson asserts, the "Great Inflation" has largely been forgotten, then this book renders an important service. It is hard for someone who lived through the years and events recounted here to believe that they have been forgotten, but perhaps it's so. Samuelson's book is generally excellent, but there are some problems: 1. The basic historical narrative is not as coherent as it might be. A more precise chronology of the development of inflation is needed. Too often the reader is taken through a decade or two of developments in one area too quickly to really understand them, and then transported back again 20 years to follow another train of events. In part this is because of the topical arrangement of the first three chapters, which might better have been combined into a single, slower chronological narrative. 2. The book does not explain in sufficient detail why inflation is so pernicious and wreaks such havoc. No-one who lived through the period doubts the evil of inflation, but a quote from Keynes and some anecdotes are not enough to demonstrate the point. 3. While endorsing the basic insight of Milton Friedman and other "monetarists" that inflation is a monetary phenomenon, the book also concludes that it was the fiscal policy of Kennedy's Keynesian economic advisors that first caused it. Both can't be entirely true, and the tension is left unresolved. Does monetary policy cause inflation or merely accomodate it? If inflation is purely monetary, why does it take a severe recession in the "real" economy to extinguish it? In short, the book does not enable the reader to understand the relationship between fiscal and monetary policy, between the real economy and the money supply, between inflation and production. This may be asking too much of it, as it is not clear that the science of economics can do this: it arguably has yet to produce such a "unified field theory". That it hasn't, and that economists themselves may not fully understand the causes of economic events, is a scary aspect of the current (Dec. 2008) scary situation. As Samuleson notes, economists' professional hubris was (or should have been) punctured by the Great Inflation; we don't need a second Great Depression to reinforce the point. The shortcomings noted herein give rise to more than just quibbles, but they should not deter you from reading this fine book, which is a first-rate piece of economic history.

5 comments about The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too.

1. This is an extraordinary book. I read the author's father's (J.K. Galbraith) book The New Industrial State in 1971 and it changed how I viewed the economy profoundly. His son has had even more impact. I realize that this book so fundamentally challenges orthodoxy (what his father called Conventional Wisdom) that it will make conservatives rant and rave. But they should really look at the data it presents, by all means disagree with what he recommends, but profoundly 'get real'. You have been taken for an enormous ride by predatory politicians, CEOs and Wall Street. I am not sure there is a conservative way out of the morass but I would really like you to try to find one as we all need all the help we can get. What your conservative principles led you into was a gigantic Ponzi pyramid selling racket. The US economy is not fundamentally free market and probably never has been. There is no obvious place on earth that is. Instead we have a pretend free market actually run for the private enrichment of a small minority, who throw the dog bones of values policies to the base. Hopefully this is about to change but the Democrats have been as profoundly infiltrated by Predator State lobbyists as the Republicans; so don't hold your breath. I just wish someone would get this book into the hands of the electorate en mass, their wiser electoral representatives and moderate Republicans. It is an eye opener. Let your eyes be open and don't just shut down its arguments in your own heads. As Keynes said: 'when confronted with new data: I change my mind: how about you?'



2. the book is highly detailed and does become redundant after a while. I liked the detail that the author used and that the did not shy away from the facts. He is very detailed and I believe what the said is true. It is a shame that the public is so far behind the truth of the writer. I have written to my congressmen and gotten the same song and dance that Obama is offering. the same speech writer was used by all and I ran my own business for over 15 years. I never borrowed money to pay the employee payroll as all of these Voinivich, Sherrod Brown and Obama said this bailout was to help protect. Any business except agriculture that has to borrow for payroll is on the downward slope anyway. We have been ripped off by the stupidity of making money without goods to back it up and this book helps understand that fact. We are in real borrowing trouble and must stop, reorganize and
   begin investing in the businesses that produce goods, not bad money. James Floyd Holmes



3. Everyone who works with his hands or brain should read this book.
   James K. Galbraith has it nailed.



4. Galbraith correctly shows us that the "free market" is an ideal construct, not a real thing. There has never been any truly "free market", unaffected by government policies for good or bad.
   
   Although I would give Galbraith a "A" for effort in dumbing down some of his discussions of economic theory, I frankly did become lost several times, but I just read on and eventually reconnected.
   
   Of course Galbraith is right in pointing out that were it not for many of the economic institutions created under FDR and LBJ, our present economic meltdown would indeed already be a global depression, caused by "financial innovations" that were as worthless as the mathematics that underlay them , and the integrity of their promoters and the Republican "free market" politicians, who encouraged and enriched themselves from their development.



5. THE PREDATOR STATE
   Understanding the financial happenings is so important. We certainly didn't learn any of this in school; highschool anyway.
   
   I heard Kenneth Galbraith interviewed on KCET and placed my order, getting 2 gifts and reading one myself.

5 comments about Liar's Poker: Rising Through the Wreckage on Wall Street.

1. Michael Lewis describes his corner of wall street pretty well. The 1980s bond market. He continually contrasts the practice and culture of trading bonds with the dogma of Economics.
   
   Over the course of the book it becomes easy to draw parallels between Wall Street and Feudal Europe. The Economists are like the Catholic Church in Feudal Europe. The Traders are like the Nobles and Royalty in Medieval Europe. The Job of the Nobles is to fight other Nobles over the right to control land, rent, and protection fees. The Job of the Church is to teach people who aren't Nobles that they should do what the Nobles tell them to. In exchange, the Church will occasionally ask the Nobles to behave a little better.



2. This book was so inspirational and superb it may have changed my life. It changed my perspective on things and it was so funny and enlightening it in a way contributed to helping me go from a Junior Manager in a Fortune 500 company to Head of Division with responsibility over 15 countries in an International Fortune 500 Company...a must read for any MBA or graduate diving into the corporate rat race and wanting to know - is anything possible? the answer is yes. Depends how you do it...A great read. Thanks!



3. Anyone looking for an idea of what its like to work at an investment bank MUST read this book.



4. This was a pretty good book because it tells you things that make you want to keep listening, it holds your attention. You will learn some things from this book. The only bad thing about this book that i didnt like was how the author occasionally went off on unusual/complicated tangents when describing things. The kind of sentences you have to read atleast 3 times.....but i still recommend it. FIASCO was also very good.
   
   sayanora



5. First half = interesting. Second half = kinda boring. Lewis has inspired me to write a better insider's account of Wall Street.

5 comments about The Great Crash of 1929.

1. THE ROARING TWENTIES REPEATED. SKY'S THE LIMIT. A GAMBLERS MINDSET. LEVERAGING. SCREW THE NEXT GUY I'VE GOT MINE. NICKLE AND DIME AN HOUR JOBS IN CHINA AND MEXICO. REMOVE ANY AND ALL CHECKS AND BALANCES. CAN'T LOSE WE'RE TOO BIG AND TOO RICH.ANYWAY, SEVEN DOLLAR AN HOUR TAX PAYERS WILL FIX IT IF IT ALL BLOWS UP...
   
   WELCOME TO THE THE GREAT CRASH OF 2008. MY ADVICE: STOCK PILE SOMETHING TO EAT AND WEAR. GET SOME SPARE PARTS FOR YOUR CAR. START A GARDEN AND GOOGLE BREAD AND SOUP RECIPES.
   YOU GONNA NEED THEM...HEE HEE HO HO.



2. Galbraith wrote The Great Crash in 1954 and he notes in his introduction that every time it was about to go out-of-print a new speculative mania would come along and a new printing would issue. One expects that the 2008 version must be in the works.
   
   Galbraith writes for the general audience, which means he not only leaves out most of the arcane details, but he also writes in an engaging style. Galbraith's view is that the great speculative boom that preceded the Great Crash was fueled by not by easy credit, but rather by a mindset that ignored risk and assumed that the market would go ever upwards - in short, a mania. The leverage that helped raise the market to unknown heights, particularly buying on the margin, also built in the means for the sudden collapse. Once the market nosed over, margin calls went out, some were met, many were not, and the market tumbled faster and farther. Galbraith demonstrates that many leaders held onto a `boundless optimism' long after any rational support for such a view had disappeared.
   
   Galbraith's main focus is on the market speculation and its collapse, but he also takes the view that the stock market collapse did in fact contribute greatly to the cause of the Great Depression. Galbraith asserts that the economy was not in strong shape before the stock market collapse. He likens the Great Crash to `typhoon which blew out of lower Manhattan'. The crash in the market struck the rich especially hard and because wealth was so concentrated the subsequent shrinkage in spending and investment by the rich caused serious damage to the economy. While we have significant safeguards in place today that did not exist in the 1930's, we also once again have a concentration of income and wealth eerily comparable to the pre-depression era.
   
   Highest recommendation. Well-written, well-argued, and timely (once again). Readers may also appreciate Galbraith's equally readable A Short History of Financial Euphoria (Whittle)



3. reading this work (written in the 1950s, and updated in the 1990s) could be reading about the current world financial situation (in 2008)



4. First published in 1954, this book is understandably piquing interest because of the current financial issues facing the United States and world. The causes of the 1929 crash do seem similar in many ways to the current issues of today in 2008. However, many circumstances are similar, as many are different.
   
   But also similar, there seems to be a rule about the phenomenon of Karma in individual human behavior. And this rule of Karma seems to apply to investing behavior.
   
   Author John Galbraith provides evidence for his argument that cheap and easy credit wasn't the major reason for the bubble-like conditions that led to the crash, but that the real factor was "speculation for the sake of speculating." Speculation for the sake of speculation caused prices to artificially rise to extremely high levels simply because investors were buying with the intent to sell for a profit ---> and the next buyer would do the same, and so on.
   
   During the 1920s many conditions inside and outside of the US financial markets provided a sense of false prosperity which was actually based on greed and speculation for the pure sake of speculation. These strong aspects of human mind and behavior that propel steep rising bubbles and steep downward slides. It's interesting how human psychology plays such a large role when markets rise in bubbles and then sharply decline. Mania involves greed on the way up, and fear on the way down.
   
   From this 50+ year-old book (with an update in the late 1990s), a reader will immediately realize some of the parallels of 1929 that exist in 2008: This does not mean the same results will happen, however. But they could happen....
   
   Gailbrath notes the significant inequality in income distribution that existed in 1929, deregulation of the banking industry, poor leadership, and bad policy and decision-making by the government because of economic ignorance and myopia. This ignorance is referred to by the author as a lack of "economic intelligence." Today, look at the current cast of characters in their *appointed* economic-power positions, and the criticism they're receiving for not only what they did *not* do, but what they *did* do once the financial downward spiral started unraveling.
   
   As a historian, the author also noted another concept from then that reminds us of current times: the Florida real-estate bubble of the 1920s. In addition to buying land, people could by the "option to buy land" on a piece of paper. They could then re-sell it, where the option would be re-sold and re-sold again, and so on, and so on. Again, speculation for the sake of speculation. These buy-options and other means, were creative financing, and over-extended lending, and excessive leveraging. Just like today, and just like then, the result was a hard fall.
   
   Housing bubbles have happened before. A disturbing concept of until recently was people treating their owner-occupied home - the home a person lives in - as an speculative investment and ATM machine during the big leaps in equity increases. Conditions caused by human "bubble-behavior" on the way up, at the peak, and on the way down.
   
   John K. Galbraith noted over 50 years ago in this book that "money doesn't grow on trees." Nor does money grow on Collateralized Debt Obligations (CDOs) that are fraudulently rated AAA when they are not, and then sold to the world. Credit Default Swaps, Helocs, ARMs, teaser rates, and NINJA. Money cannot be invented out of nothing. Call it Karma, physics, or the fundamental concepts of investing. Making money out of thin air can only last a short time, with negative consequences often the result. The author stated that as time passes and the seismic crash of '29 fades from memory only to be highlighted as a side-note in history books: that rampant speculation, greed, and bubbles will happen again, followed by an inevitable bust.
   
   "Those who cannot remember the past are condemned to repeat it."
   ~ George Santayana, The Life of Reason, Volume 1, 1905
   
   As a layman who consistently attempts to self-educate myself about economic events, I do see a similar, yet also very different type of crash happening today as in 1929. Currently I see it as a steady decline. A slow and steady decline, that will be long-term and bring a lower standard of living. People will to have change their focus about what is important in life, if they'll be able to cope with the new economic circumstances and world that we'll be living in.
   
   This is a well-written and good historical book by Kenneth Galbraith.



5. I keep this book around to read occasionally. My edition has a printing history going back to 1954. The stock market crash is a point in history that I've tried to understand. mmm...the bankers kept pumping money into the system...until they couldn't do it anymore. Who were these people and how did this happen? Well, today I picked it up again.
   
   According to Galbraith, the US economy was already in a Depression by October 1929 as the stock market reacts to the economy and never the reverse. It became fashionable for working people to get into the stock market. Before the crash, there were some signs of economic downturn, but no one expected the disaster it became. It was a bubble that had to be pricked. This sounds so familiar now.
   
   In John Kenneth Galbraith's able hands, the story is revealed. Galbraith was, along with other talents, an excellent writer and storyteller. Not a huge book full of dry details but a story brought to life. Recommended reading.

5 comments about The Shock Doctrine: The Rise of Disaster Capitalism.

1. My first copy of "THE SHOCK DOCTRINE, the rise of disaster capitalism" by Naomi Klein was a gift from a friend.
   
   After i had read 3 chapters i wanted EVERYONE to read it because it goes to the roots of the current economic meltdown.
   
   It is very well written..a 'page turner' and truly shocking about what it reveals the U.S. the IMF and the WORLD BANK have done around the world since the '70s causing immense suffering and bloodshed in forcing poor countries to have 'FREE MARKETS"
   
   I have already given away 11 copies and just bought 5 more to give away.
   
   It's a MUST READ if you want to understand our current economic problems.



2. I listened to Naomi Klein on a podcast where she was giving a speech, as I recall, to folks gathered at the University of Chicago. Her presentation was well-organized, intriguing, and invited further exploration. So I purchased the book to explore the subject further.
   
   This is one of those situations where more argues for less -- less detail if non-economists are to follow the labyrinth of public facts and private assumptions, fewer allegations unsupported by research footnotes, and smaller conspiratorial webs.
   
   The Shock Doctrine reminds me of literature generated by Populists during the turn of the nineteenth century. In place of the wounded yeoman farmer, Naomi Klein introduces us to supporters of "pink" economies who succumb to conspiracies engineered by the Chicago Boys and the Berkeley Mafia, all of whom are disciples of Doctor Shock, Milton Friedman.
   
   Naomi gives a small elite much more credit than they are due and, if true on some key points, raises more doubts in my mind about the competence of journalism and the "loyal opposition" during much of the time chronicled in this deeply disappointing book.



3. Not being an economist, I found this audiobook understandable and interesting. The author made the concepts clear, a point of view everyone should consider within the mix.



4. For the first nine chapters of the SHOCK DOCTRINE by Naomi Klein I could not put the book down until I had finished reading it word for word. Having been suitably impressed I immediately purchased three additional copies and have given them out to professional colleagues who I know enjoy reading about history and economics, especially in regards to humanitarian and development issues in third world countries, and their volatile causes/treatments.
   
   I work in a team of people providing business advice on risk, governance, financial viability, and management issues within government circles. We rely on evidence based information and examples of best practice standards in an attempt to form meaningful, arms length, positive future based recommendations to safeguard the needs of various stakeholders. This is done to uphold a particular values and belief system within the culture we operate in.
   
   Naomi Klein's SHOCK DOCTRINE provides a stunning example of all of these factors - the theory, the principles to be applied from this theory, the political element, the execution, the results, and the feedback and refinement of the theory. The context is the way in which free-market economic revolutions require the subjugation of the psychological free will of the people to form their own consensus, and their own democracy, to be accepted. While I'm still slowly digesting the rest of the book, one of the most compelling observations I think KLEIN makes early on, is that purist capitalism does not allow for the presence of competing or tempering world views; it requires a monopoly on ideology. This monopoly condition is a total contradiction in the free-market theory which is supposed to actively encourage competition so that ALL consumer's utility can be maximized at the "bliss point" under Pareto Optimality conditions i.e. having the ability to execute CHOICE is the defining benefit of liberalism, and free-markets over state run command economies.
   
   If you're interested in the use of university silo economics based research, psychological trauma, their theoretical underpinnings and how these have been imposed on real people and communities, and the variable results (some negative, some positive), the SHOCK DOCTRINE is essential and excellent reading. You don't have to agree or disagree with everything presented here; the value of a good non-fiction book like Klein's is in the evidence base, and how carefully linked the conclusion is made to this base. Definitely food for thought.



5. This well-researched book is clearly written and should be read by anyone wanting to understand world politics and economics.

5 comments about Panic: The Story of Modern Financial Insanity.

1. I have to admit, I read the Dave Barry segment first. In it I learned that there are three proven techniques guaranteed to lose you money in real estate: Buy an old house, buy a new house, or get a mortgage. After I finished laughing about OHDD (Old House Delusion Disease), I moved on.
   
   This anthology has a simple idea: "to re-create the more recent financial panics, in an attempt to show how financial markets now operate." Each of the four parts of the book has articles written during the heat of the crisis, and more penned afterwards about the causes and effects and repercussions of the event. Part I examines the stock market crash of 1987. Part II looks at the Asian currency crisis of 1999 which triggered the Russian government bond default that brought down the hedge fund Long-Term Capital Management. In Part III the Internet bubble bursts. Lastly, and most poignantly, Part IV delves into the current subprime mortgage debacle.
   
   A segment by Peter S. Goodman of the New York Times titled "This is the Sound of a Bubble Bursting" sobered me up. Written at Christmas time 2007, this article is all about the real estate bust in Cape Coral, Florida, on the mainland near where I live. Goodman gives example after example of people losing everything, of communities gone dark after being abandoned, and the crime rate rising in these darkened neighborhoods. The only good news for Elaine Pellegrino's family, who haven't paid their mortgage for four months, is "the courts are so stuffed with foreclosures that they assume they can stay for a while."
   
   This is scary, depressing stuff, but the writing makes the big picture clear. I highly recommend Panic to any grownup who wants to understand what has happened in our financial world. You might want to have a Dave Barry book nearby to cheer you up afterward.
   
   (A handy glossary in the back deciphers financial terms for readers that don't know their Derivatives from their Ninja Loans.)
   
   Here's the chapter list:
   
   Introduction: Inside Wall Street's Black Hole
   
   Part I: A Brand-New Kind of Crash
   1. Stephen Koepp, "Riding the Wild Bull"
   2. Scott McMurray and Robert L. Rose, "The Crash of '87: Chicago's `Shadow Markets' Led Free Fall in a Plunge That Began Right at Opening"
   3. From the Brady Commission Report
   4. Tim Metz, from Black Monday: The Catastrophe of October 19, 1987 ... and Beyond
   5. Michael Lewis, from Liar's Poker: Rising through the Wreckage on Wall Street
   6. Stephen Labaton, "The Lonely Feeling of Small Investors"
   7. Richard J. Meislin, "Yuppies' Last Rites Readied"
   8. Eric J. Weiner, from What Goes Up
   9. Lester C. Thurow, "Did the Computer Cause the Crash?"
   10. Terri Thompson, "Crash-Proofing the Market; A Lot of Expert Opinions, but Few Results"
   11. The Economist, "Short Circuits"
   12. Robert J. Shiller, "Crash Course: Black Monday's Biggest Lesson -- Don't Run Scared"
   13. Franklin Edwards, from After the Crash
   
   Part II: Foreigners Gone Wild
   14. Reed Abelson, "Mutual Funds Quarterly Report; The Forecast Looks Brighter for Adventure Travel"
   15. The New York Times, "Thailand Warns Currency Speculators"
   16. David Holley, "A Thai Business Wonders, Will It All Crumble?"
   17. Paul Krugman, Reporter Associate Jeremy Kahn, "Saving Asia"
   18. Interview with Rob Johnson, from Frontline's "The Crash"
   19. The Economist, "Finance and Economics: A Detour or a Derailment?"
   20. Michael Lewis, "Pulling Russia's Chain"
   21. Interview with Jeffrey D. Sachs, from Frontline's "The Crash"
   22. Michael Lewis, "How the Eggheads Cracked"
   23. Joseph Stiglitz, "10 Years After the Asian Crisis, We're Not Out of the Woods Yet"
   24. Keith Bradsher, "Asia's Long Road to Recovery"
   25. Choe Sang-Hun, "Tracking an Online Trend, and a Route to Suicide"
   
   Part III: The New New Panic
   26. The New York Times, "Bigger Netscape Offering"
   27. The New York Times, "Underwriters Raise Offer Price for Netscape Communication"
   28. Laurence Zuckerman, "With Internet Cachet, Not Profit, a New Stock is Wall St.'s Darling"
   29. Carrick Mollenkamp and Karen Lundegaard, "How Net Fever Sent Shares of a Firm on 3-Day Joy Ride"
   30. Michael Lewis, "New New Money," from The New New Thing
   31. Rebecca Buckman and Aaron Lucchetti, "Cooling It: Wall Street Firms Try to Keep Internet Mania from Ending Badly"
   32. Jack Willoughby, "Burning Up"
   33. John Cassidy, from [...]: The Greatest Story Ever Told
   34. Erick Schonfeld, "The High Price of Research: Caveat Investor: Stock and Research Analysts Covering Dot-Coms Aren't as Independent as You Think"
   35. Katherine Mieszkowski, "[...]: Internet Companies Threw Millions into the Air at he Super Bowl. They're Still Pretending They Scored a Touchdown."
   36. Mark Gimein, "Meet the Dumbest Dot-Com in the World"
   37. James Surowiecki, "The Financial Page: How Mountebanks Became Moguls"
   38. Jerry Useem, "Dot Coms: What Have We Learned"
   39. Michael Lewis, "In Defense of the Boom"
   
   Part IV: The People's Panic
   40. Dave Barry, "How to Get Rich in Real Estate," from Dave Barry's Money Secrets
   41. John Hechinger, "Shaky Foundation: Rising Home Prices Cast Appraisers in a Harsh Light"
   42. John Cassidy, "The Next Crash"
   43. Robert Julavits, "As Bubble Speculation Rises, Industry Sees Little Fear"
   44. Peter S. Goodman, "This Is the Sound of a Bubble Bursting"
   45. Christopher Dodd, Opening Statement of Chairman Christopher Dodd, Hearing on "Mortgage Market Turmoil: Causes and Consequences"
   46. James Surowiecki, "Subprime Homesick Blues"
   47. Roger Lowenstein, "Triple-A Failure"
   48. Larry Roberts, from "Rudolph the Red-Nosed Reindeer"
   49. Kate Kelly, "Bear CEO's Handling of Crisis Raises Issues"
   50. Michael Lewis, "What Wall Street's CEOs Don't Know Can Kill You"
   51. David Henry and Matthew Goldstein, "The Bear Flu: How It Spread"
   52. Michael Lewis, "A Wall Street Trader Draws Some Subprime Lessons"
   53. Paul Krugman, "After the Money's Gone"
   54. Matthew Lynn, "Hedge Funds Come Unstuck on Truth-Twisting, Lies"
   55. Gregory Zuckerman, "Trader Made Billions on Subprime"



2. As I look at the Amazon product page for the book I've just received, there's nothing that indicates that this is NOT a book written by Michael Lewis. Rather, it's a collection of short articles (a lot of them, probably 50-75 in total, of which he wrote 6) that he selected to discuss various topics. My rating doesn't reflect the quality of the articles - I'm sure they're good, and I've actually read some of them in the past year. My rating reflects the fact that this isn't a new Michael Lewis book, and that isn't indicated anywhere. Disappointing.



3. Michael Lewis, who previously wrote the popular book "Liar's Poker," takes his own spin on our country's most notable financial catastrophes of the last twenty years. These include:
   
   1. The 1987 stock market crash
   2. Russian default and eventual failure of Long-Term Capital Management (hedge fund)
   3. The Asian currency crisis
   4. The bursting of the Internet stock bubble
   5. And, of course, the recent subprime debacle
   
   This book's analysis is quite comprehensive, and, as you can imagine, the shortcoming of looking at so many factors is the treatment of each could be more thorough. The commentary and analysis that is there is excellent, and I learned a lot from it. Lewis spends a lot of time rehashing the best of past analyses from the likes of economists Joseph Stieglitz and Paul Krugman and Wall Street Journal reporters Gregory Zuckerman and Roger Lowenstein. There are excerpts from his own previous books and articles, including an account of his time as a trader at Salomon Brothers in the midst of the junk bond crash of 1987 and his observations on the Internet boom and bust. Overall his narrative is elegant and profound, and the arguments are on-target, including his lambasting of shoddy risk management at financial firms, foolish principles guiding sophisticated Wall Street traders, and the problems caused "by the new complexities of the financial markets."
   
   Another book I strongly recommend that has been a somewhat surprising recent discovery for me and an extremely helpful guide for dealing with the pressures of the current economy is The Emotional Intelligence Quick Book



4. OK, this is clearly a collection of articles that Michael Lewis had sitting around. He's a good journalist, and I expect he copies and files any bit of good writing that might come in handy as a future reference. Now, about 2 months after the real estate bubble well and truly bursts, he is able to pull out the articles and collate them into a book. That is not a bad thing, per se, but it is certainly something a buyer should know before a purchase. Lewis selected the articles, wrote some, and provides some brief commentary, but this is not Moneyball or Liar's Poker.
   
   Still, that might not be a bad thing if the collection served an overall purpose. By reviewing 5 major bubble/panic cycles since 1987, here is what I would suggest a reader should come away knowing:
   
   1) How can you tell when a market has entered a period of "irrational exhuberance"? How can you tell when the next bubble is starting?
   
   2) How can you tell when a bursting bubble has tipped over into a period of over-correction? How do you know you are in a panic?
   
   3) What should you do in situations 1 or 2?
   
   Unfortunately, my summary of the answers from Lewis's "Panic" would be:
   
   1) When people are writing articles like these.
   2) When they start writing different articles, like these others.
   3) Heck, who knows, read "The Hitchhiker's Guide to the Galaxy" (which has "Don't Panic" in large, friendly letters on its cover).
   
   In my opinion, Lewis offers too little to tie together his articles. There is no doubt wisdom in them, and maybe the points are obvious to Lewis. To me, it felt like getting the reading assignments for a college finance course, then showing up for the lectures to tie them together only to find no lecturer.
   
   Disappointing.



5. (Memo to those who do: I heard yesterday that he may be at work on a new book right now, so don't get too mad about your current disappointment...)
   
   As other reviewers have noted, this is NOT by Michael Lewis. Rather, the same guy who gave us Liar's Poker: Rising Through the Wreckage on Wall Street and The New New Thing: A Silicon Valley Story has worked through a variety of sources in search of the best reportage on past financial market panics. At the time Lewis was toiling on assembling this (the last story in the anthology is dated in January 2008), it must have been hard to imagine how topical this would become. Certainly, the readings offer clear insight, from many different points of view, on how financial manias emerge, grow, build and then burst, triggering, yes, panic. In light of the events of the last six months or so, this book arrives right in time to give us a framework within which to ponder our current plight. And in some ways, I'd rather have this anthology than a book by Lewis himself -- no single viewpoint is going to give any reader a firm handle on this complex topic.
   
   I particularly appreciate Lewis's eclectic sourcing. He goes to humorists like Dave Barry as well as outstanding business reporters like Roger Lowenstein and Greg Zuckerman to obtain insight into the phenomena that we are all seeing played out before our eyes today. Joseph Stiglitz opines on the aftermath of the Asian Crisis in a piece pulled from "Project Syndicate"; he includes blog entries and statements by politicians. He has reproduced Jack Willoughby's classic financial reporting effort on the rate at which dot.com companies were burning through cash, published by Barron's in March 2000 -- just as that market was about to turn very sour indeed.
   
   This is a very valuable contribution to the relatively scanty ranks of accessible business/financial reporting. For those who don't scour the busienss press daily, it will provide them with insight into the way financial markets normally work and what kinds of factors can lead to them becoming distorted. Even those familiar with the way Wall Street works should find this both intriguing and useful, reminding us that there really is no such phenomenon as "it's different this time."
   
   The one element of this collection with which I would quibble is the implication that we can learn enough from past mistakes not to repeat them. While I do believe that we should have been able to learn more from past manias about spotting a mania in development (i.e. Alan Greenspan should be ashamed at not having recognized the implications of the real estate asset bubble as it took shape), each mania (like each rogue trader) arises in different circumstances and finds its own trajectory. In this context, it would have been interesting to see a greater focus on attempts to improve risk management models -- the art of trying to prevent periods of irrational exuberance turning into manias and panics.

5 comments about The Ascent of Money: A Financial History of the World.

1. "Those who don't learn from History are doomed to repeat it!" - George Santayana
   
   The current financial crisis has got almost everyone re-evaluating their financial situations. I am no different.
   
   Knowledge is power and with all the shenanigans on Wall Street today it is critical for financial survival to become as knowledgeable as possible about money and finances. This is accomplished by reading top notch information that can help you make wise decisions about your financial future.
   
   Fortunately we live in a time when quality "just in time" information is available. Ferguson's book fits into this category. It is a crucial piece of the knowledge needed to understand the history of money and what others have done in the past when they were faced with financial Armageddon.
   
   Although history doesn't repeat itself exactly, it does provide important clues to today's economic meltdown and how the survive...and maybe prosper in the future.
   
   As Ferguson states in the Introduction: "The more integrated the world's financial markets become, the greater the opportunities for financially knowledgeable people wherever they live -and the bigger the risk of downward mobility for the finically illiterate."
   
   He goes on to say: "The rewards for `getting it' have never been so immense. And the penalties for financial ignorance have never been so stiff."
   
   There are many excellent historical examples in the book that provide key elements to the mindset of the best financial experts who have ever lived. How others in history (such as the Rothschild family) made their fortunes...and mistakes, teaches how proper planning and execution can be applied successfully to make money. It also teaches how chance and fate work their way into the equation.
   
   Ferguson's book is a key element in learning about money. He occasionally delves off topic and can lose the reader if not cautious; however this is a small price to pay for the knowledge contained between the pages of this book.
   
   Financial Shock: A 360º Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis
   
   Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis
   
   The Re-Discovery of Common Sense: A Guide to: The Lost Art of Critical Thinking



2. Mr. Ferguson has a set pattern in his writings of lots of magician tricks to make the audience believe the show is real by telling them Jeopardy question facts before moving on to not pointing the real finger of Truth at anything.
   If you want to read a skewed version of not the entire subject, then read Mr. Ferguson's books. One should note that just not anyone can get published in the literary industry unless you have the blessing of the very people you are exposing. In noting that, this book could be more looked at as "A Robber Barons' Guide to the Galaxy in how we snookered the world" with Niall Ferguson as the guy running the spotlight who keeps flicking that light onto other areas.
   
   The current financial crisis is an attack on the United States proper which was engineered out of the central banks of Europe. If one bothers notice, France was the banking house which set off the same shock waves in housing and derivatives collapse. There are no coincidences in this as it is all staged just as Warren Buffett was bragging about over 30 billion in profits which came out of people loosing money in their 401K's until he was exposed and then the headlines were planted, "Poor Warren his stocks are falling too".
   Amazing how over 100 billion in a company, a billion for each of his children in a trust which can not be taxed and being a billionaire makes one poor when you have the president elect's political ear with all the other financial titans who are profiting off of all of this.
   
   Mr. Ferguson's credentials mean nothing as he is no Victor Davis Hanson at Hoover. Mr. Ferguson is the Dinesh D'Souza of fellows in writing a great deal in things he explores from other people's work.
   No one is pointing out in this the devaluation, the constriction of the economy, the way money is being flushed out of the Stock Market so the financial houses can sweep it up or leave savings accounts with devalued dollars nor are they pointing out all of this just did not happen.
   Iceland was the control to see the effects and is imploding. England will be the next implosion with America the final implosion leaving the central Europeans in financial control while looking to Chinese and Indian slave labor or military fodder backed by Russian oil and arms.
   
   The great minds have noted a Eurasian world war is coming and what is happening in this attack upon the United States happened during Lincoln's era, happened during the 30's and again in the 70's. What is brewing now is a shift from this economic warfare for global superpower to a world war in which Eurasia implodes.
   Mr. Ferguson not taking the entire picture into account in how this is a direct attack upon Anglo American finance, assisted by many traitors to their own nations highlights his book is either inept or the only reason his book was manufactured just in time to herd the masses into thinking it is all just a typical event is but propaganda from the very people behind this financial manipulation.
   
   I would not purchase this book. I would instead invest the money into something sound that the financial titans can not get their hands on.
   
   There is an even older lesson that is free in economics:
   
   Stay out of debt. Invest in things which can not blow away and always make certain you have your own home paid for.
   
   Follow that advice in what is coming or read someone like Mr. Celente published online who has been predicting quite accurately the economic problems and you will be farther ahead than knowing what Mr. Ferguson is selling.
   
   May God keep us in the times ahead. Amen



3. well written book, good for ordinary readers with limited economics. A lot of short stories that's interesting to read.



4. Ferguson deserved considerable credit in Colossus for suggesting that a reckoning was upon us. In this book, written before the real calamity hit, he points to the assumptions that have been made leading to the crash. It's plain that no there's no quick fix, that problems are deep, but not without precedent. His breadth of erudition comes through as always but his voice as a writer has continued to strengthen. He's smart, doesn't talk nonsense, and clearly articulates the false premises in our recent past and suggests what should change going forward. A far better book than say, Bad Money - less Bush bashing, better focus on the longstanding issues. Or Disaster Capitalism - which is so polemical. Why not get the story from a professional academic?



5. Light stuff, a bit of everything, hastily assembled for a quick buck while the credit crisis is still around. Niall Ferguson has stopped doing serious works for a long time, being too busy writing best-sellers.