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Amazon.co.uk Review
Rampant speculation. Record trading volumes. Assets bought not because of their value but because the buyer believes he can sell them for more in a day or two, or an hour or two. Welcome to the late 1920s in the US. There are obvious and absolute parallels to the great bull market of the late 1990s, writes Galbraith in a new introduction dated 1997. Of course, Galbraith notes, every financial bubble since 1929 has been compared to the Great Crash, which is why this book has never been out of print since it became a bestseller in 1955.
Galbraith writes with great wit and erudition about the perilous actions of investors and the curious inaction of the government. He notes that the problem wasn't a scarcity of securities to buy and sell: "The ingenuity and zeal with which companies were devised in which securities might be sold was as remarkable as anything." Those words become strikingly relevant in light of revenue-negative start-up companies coming into the market each week in the 1990s, along with fragmented pieces of established companies, like real estate and bottling plants. Of course, the 1920s were different from the 1990s. There was no safety net below citizens, no unemployment insurance or Social Security. And today we don't have the creepy investment trusts--in which shares of companies that held some stocks and bonds were sold for several times the assets' market value. But, boy, are the similarities spooky, particularly the prevailing trend at the time toward corporate mergers and industry consolidations--not to mention all the partially informed people who imagined themselves to be financial geniuses because the shares of stock they bought kept going up. --Lou Schuler, Amazon.com
Customer Reviews:
Recommended for Everyone.....
This is a great book in many ways. Its a very unbiased, balanced and accurate description of the Great Crash and the following Great Depression. Having recently lived through the dot-com boom and credit-crunch you can see the same things have happened all over again, albeit in different way. And also, that while it will hopefully take a few decades, its all going to happen again at some point - no matter what the politicians say today!
It also has to be noted that Galbraith's writing style is incredibly succinct and to the point. Many other authors would take twice as long to cover the same content.
All of this makes the book a pleasure to read and its analysis and conclusions very worthwhile.
Causes of The Great Crash and Depression 1929 to 1941
The fall in the stock market in the USA created a depression more severe than any ever seen in modern history. This grew from what would normally have been a usual boom to bust recession. The reasons for the depression are well documented by JK Galbraith in 1954. The learning lessons are as relevant today as they were 50 years ago. Unfortunately, in the first years of the 21st Century the alarm bells did not ring in time - indeed the end of a boom is only ever realised when it turns to a bust. Had the reasons why the 1929/1930 recession turned into a 12 year depression been actively addressed then much harm could have been avoided.
The harm included:
* Up to 20% of the workforce being made unemployed;
* Collapse in speculated savings amongst an influential minority;
* Ruination of a once effective agricultural system; and
* A decade of falling living standards.
It is concerning to realise that the five key reasons Galbraith identified for the cause of the Great Depression of the 1930's were also very much present in the first part of this Century. Namely:
1. Growing Unequal Distribution of Income;
2. Weakening Corporate Structures;
3. Lessening Robustness of the Banking Structure;
4. Out of Kilter Foreign Exchange Balances; and
5. Poor State of Economic Intelligence - belief that a new paradigm of continual growth / financial success had been reached.
We may not have spotted the on-set of the current recession but we have hopefully learnt to prevent it turning into a decade long experience. Thanks to Mr Galbraith's insights.
A Classic
Not that easy to read and a little bit hard in some areas (not a novel shall we say). BUT very relevant for 2009. Read it and be astonished at just how little we have learned (or perhaps how much we have forgotten).
I will not be surprised if this book isn't a "Nostradamus" for events that will happen in 2010 onwards.
It all sounds so very familiar. We have been here before people - read this book and you will see why and how.
History doesn't repeat itself, but it rimes. - Mark Twain
Very familiar with the crash of 2008, this book is somewhat THE play book for the past events (Greenspan put, Housing bubble, SEC, the domino effect, malinvestment, etc.) which led us into the abyss of the first Global Recession. Despite that this book covers the happenings before and slightly after the stockmarket crash of 1929, it perfectly describes lively and vividly the patterns my generation has witnessed (banking, finance, government, businesses, consumption, etc). As Mark Twain once wrote; ''History doesn't repeat itself, but it rimes'.
Inaction was advocated pre-1929 and pre-2008 even though it meant deep trouble in the future. Historians told us (and tell us) what the years after the crash looked like (for the USA and others). Thus governments and international agencies (IMF, Worldbank, central banks) TODAY step in big time to prevent the same from happening again. But with even more unsound economic fundamentals TODAY than they were back than, we all don't know what the future holds. But one thing I know - it rimes with the Great Depression of the thirties.
Deja vu all over again
This is an amazing book. A joy to read, hilariously funny, and useful in the current economic environment to spot government propaganda.
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http://thegreenwellsociety.com/2008/02/17/economics-reading-list/comment-page-1/
