Book Description
"Sometime in the next five years you may kick yourself for not reading and re-reading Kindleberger's Manias, Panics, and Crashes." -Paul A. Samuelson, Institute Professor Emeritus, Massachusetts Institute of Technology
"One never picks up a work by Charles Kindleberger without anticipating a feast of entertainment. But underneath the hilarious anecdotes, the elegant epigrams, and the graceful turns of phrase, Kindleberger is deadly serious. The manner in which human beings earn their livings is no laughing matter to him, especially when they attempt to do so at the expense of one another." -from the Foreword by Peter L. Bernstein, author of Against the Gods and The Power of Gold
Praise for Manias, Panics, and Crashes
"Classic. . . . Manias, Panics, and Crashes is a durable guide to meditation: wise, witty, and practical. It is a template against which to measure the latest financial crisis-whatever and whenever that happens to be." -David Warsh, Boston Globe
"Definitive." -Floyd Norris, New York Times
"Menacing..." -The New Yorker
"[Manias, Panics, and Crashes] is a scholarly account of the way that mismanagement of money and credit has led to financial explosions over the centuries."-Richard Lambert, Financial Times
"This book sparkles with the best of Kindleberger's wit, insight, and passion for financial history. A real delight."-Robert Z. Aliber, Professor of International Economics and Finance, University of Chicago, Graduate School of Business
"What long has been the best history of financial pathologies is now even better. The reader who absorbs Kindleberger's lessons will be prepared to foresee and navigate the financial crises that surely lie ahead. Like a true classic, Manias, Panics, and Crashes is both timely and timeless." -Richard Sylla, Kaufman Professor of Financial History, Stern School of Business, New York University
Customer Reviews:
A classic -- but showing its age.......2006-09-25
This book probably deserves the title of "classic", being one of the first attempts by an economist to popularize for a broader audience a theory of speculative financial bubbles that takes into account "modern" macroeconomic theory (e.g. Keynes and the monetarists). The book identifies many common themes among some of the great financial manias in history, providing along the way some entertaining anecdotes and commentary.
Nevertheless, classic or not, I was a bit disapointed with the book. After 30 years and several editions it seems to be showing its age, with numerous uneven and unconvincing attempts to update the text to the late 20th century. I also found that the many historical examples were not well told or clearly differentiated and tended to blend together. Chancellor's "Devil take the Hindmost" seems to do a better job at providing a history of the great speculative bubbles. Most importantly, Kindelberger writes alot about what goverbnments should do after crashes occur, but he does not help much with a useful framework for spotting bubbles as they emerge -- or understanding how they tend to unravel.
Great Scholarly work but how does an investor make a buck?.......2006-02-26
I don't recommend this book for a general business audience. It does a fine job of chronicling various panics. I was hoping for a book that focused on causes of panics and manias and how to identify one when you are in it.
Speculation leads to disaster and must be borne by the central bank........2005-12-08
Speculation excesses are referred too as mania and revulsion from these excesses take the form of crisis, crashes, or panic which are historically common. The excess speculation builds as investor seize new opportunities for profits and are overdone. Hyman Minsky describes these new opportunities as the result of displacement. Displacement are events leading up to a crisis, such as, outbreak or end of war, bumper harvest or crop failure, widespread adoption of an invention, or some political event. Displacement must be a significant size. Displacement brings opportunities for profit and increased demand causes price to rise. Banks artificially increase supply without proportional increases in demand by expanding the money supply that demand would have generated. The money supply expansion is notoriously unstable. Feedback fuels Euphoria for price increase; the Euphoria turns investment from really valuable products to delusional ones. Boom is characterized as rising interest rates, as Banks threaten discredit and hedge against the speculation by raising rates; trading velocity increases and the velocity of circulation and turnover ratios rise; and stock prices increases. Boom is fed by expansion caused by bank credit; credit increases the money supply and destablizes the investment.
Once the excessive character of the upswing is realized, the financial system experiences a distress and then rushes to reverse expansion resembling panic: real or financial assets converting to money, premature repayment of debt, and prices crashes in commodities. Minsky explains that selling at the top falters because there is not enough money too sell out at the top.
Revulsion of the commodity halts banks from lending on the commodity as collateral, this is called discredit. Discredit leads the panic as people crowd to get out the door. People may stop trying to get out the door, if price falls and the commodity looks like a bargin, trade is cut and price declines stop hemmoraging, or a lender convinces the market money will become available. When the economy becomes depressed, Banks view borrowing as a risky prospect and may prefer to put their money in government securities.
Banks fail when too many borrowers default on their loans and the borrowers collateral is not enough to cover the debt. Inflation and deflation should not affect long term growth. When prices fall a corresponding drop in wages also may occur. Employment and purchasing power remain neutral. Wo, comes unto the borrower. The borrower suffers because the debts are fixed. The creditor benefits because expense money is returned in debt payments and this money can buy more, a value added function. Depression is characterized by a reluctance for banks to loan money, discreditation of the commodities to be used as collateral decreases the amount of loanable money the bank is willing to extend to the borrower, and tight money slows growth.
The world markets operate as if men are rationale over the long run. Irrationality may exist as economic actors choose the wrong economic model, fail to account for a particular piece of information, or fail despite a rational expectation as lags between stimulus and reaction fail to meet expectation. Composite fallacy confuses the truth, as investors believe that the whole is more than the sum of its parts. Speculation leads to disaster and must be borne by the central bank.
Superb treatment of the speculative nature of financial markets.......2005-09-29
Kindleberger's book provides massive historical evidence to support his assessment of the boom-bust nature of financial markets.Basically,speculative excesses,financed in large part by margin account loans and easy bank credit,leads to a pattern where the debt load of many market participants is overleveraged.Like the straw that breaks the camel's back,all it takes is an exogenous(or endogenous) shock to pop the speculative bubble .The value of the underlying assets of the overleveraged market participants collapses.These individuals go bankrupt,causing a chain reaction as other participants are impacted by the bankruptcies and up bankrupt themselves.Kindleberger correctly identifies the major theorists of this outlook as I.Fisher(his debt-deflation theory)and H.Minsky(his financial fragility theory).There are a few small defects.First,Benoit Mandelbrot's nearly fifty years of statistical-empirical work on the "wild " risk inherent in all of the different financial markets worldwide would have provided a perfect fit with the historical and anecdotal evidence that Kindleberger has collected.Second,there is only a brief footnote on the role of exogenous "sunspot"uncertainty going on in this historical process.Kindleberger overlooks the technical analysis of the effect of uncertainty, in microscopic,decision theoretic terms,on decisions made by Keynes(Keynesian uncertainty)and Ellsberg(Ellsbergian ambiguity).The problem here is not necessarily irrational decision makers,but rational decision makers who lack sufficient relevant information to apply the standard neoclassical decision techniques.These decision makers KNOW that they don't know.They then decide to follow those whom they believe are better informed.This leads to crowd,herd,and cascade effects that both creates the bubble and the crash.One possible way to stop this recurring pattern would be to eliminate margin loans Third,Kindleberger appears to be unaware that Keynes would agree with most of Kindleberger's case.From Keynes's early 1910 lectures on the negative impacts of speculation on stock markets through the A Tract on Monetary Reform,A Treatise on Money,and the General Theory(chapters 12,17,and 22),one can find Kindleberger's points explicitly considered in Keynes's work.Of course,Keynes does not provide the vast historical evidence that Kindleberger provides.Keynes would likely argue that ,since his theory is a general theory of decision making under conditions of risk,uncertainty,and ignorance that applies where ever organized financial markets exist,he would already know what the historical record would show if examined in historical detail.
A must for your collection.......2004-12-17
This book lays out the blueprint to spot a financial crisis in the making.
A. Plenty of money in supply and preferably at cheap rates.
B. A 'new technology'-from the birth of railroad stocks, to letter stocks of the 1960s and dot coms of the late 1990s.
C. A willing and enthusiastic media outlet (think CNBC and the dot com boom).
D. Cab drivers and plumbers suddenly trading actively in the respective markets. Another note I would throw in is when the investment community are saying 'it is different this time, simple valuation of securities is no longer possible'.
Kindleberger's work draws on this scenario time and time again.
A required reading for anyone actively trading in the markets.
Book Description
"Underneath the hilarious anecdotes, the elegant epigrams,s and the graceful turns of phrase, Kindleberger is deadly serious. The manner in which human beings earn their livings is no laughing matter to him, especially when they attempt to do so at the expense of one another. As he so effectively demonstrates, manias, panics, and crashes are the consequence of an economic environment that cultivates cupidity, chicanery, and rapaciousness rather than a devout belief in the Golden Rule." - From the Foreword to the Fourth Edition by Peter L. Bernstein, author Against the Gods and The Power of Gold
Praise for previous editions of Manias, Panics, and Crashes
"Classic....Manias, Panics, and Crashes is a durable guide to meditation: wise, witty, and practical. It is a template against which to measure the latest financial crisis-whatever and whenever that happens to be." - David Warsh, the Boston Globe
"Definitive." - Floyd Norris, The New York Times
[Manias, Panics, and Crashes] is a scholarly account of the way that mismanagement of money and credit has led to financial explosions over the centuries." - Richard Lambert, Financial Times
"What long has been the best history of financial pathologies is now even better. The reader who absorbs Kindleberger's lessons will be prepared to foresee and navigate the financial crises that surely lie ahead. Like a true classic, Manias, Panics, and Crashes is both timely and timeless." - Richard Sylla, Kaufman Professor of Financial History, Stern School of Business, New York University
Customer Reviews:
A classic book on financial bubbles from an exceptional scholar.......2007-10-01
Kindleberger was a professor of economics at MIT, and a deep scholar of the history of financial bubbles and subsequent crashes. He proves with many examples that growth in the supply of credit is a fundamental factor in bubble development, stengthening associations of this type categorized by Hyman Minsky. While Kindleberger's writing is sometimes redundant, his amazing grasp of the details of financial history, numerous examples, and deep understanding more than compensate for this minor limitation of style. This book has been through 5 editions and is an indispensable reference; it is also a fascinating read. It should not to be missed by any serious investor, nor any student of financial manias and panics.
Writing after crashes is easy.......2007-09-04
Many causes for financial crashes. All have more or less the same pattern. A lot of publication appear after a crash, who will write before the crash?
This book gives good insight into financial chaos.
If you like investments, you need read this book. Now!.......2007-07-10
This book is exceptional.
After read it you will see the market, the history, and... Specially the warnings, with other eye.
Kindleberger wrote an excellent book about Manias, about Panics, about Crashes, about HOW keep alert!
Don't panic... just read it.
[...]
A History of Financial Crises by Kindleberger.......2007-06-10
This is heavy reading even for an academian, if I'm not mistaken. It goes on-and-on citing the details of finacial crises in history going back several centuries. There's no question that Mr Kindleberger's research is majestic. For any student that is exploring historical materials on finance, this book woould be a great source. One of the hardest part of this book is to sort out useable information for the average person that wants to be an alert investor.
John Casey
Northville, MI., 48167
Economic history.......2007-04-17
History always has lessons to teach us. In addition to comments by Golden Lion from Utah, I believed this book really spoke poignantly about the "adjustment process" of global or local market imbalances and the possible causes.
The causes are elaborated in many different examples from the Dutch Tulip crash to the dot-com crash. Signs of the excess liquidity, overly generous expectations of future demand, and other general characteristics are drawn from these events.
In the economic case where A has caused B, then B has caused C, and so on. If Z is a market crash, one cannot blame Y for losses. The book writes that its the cumulative effects of A-Y that has caused this, and more likely the pin-prick that pops a "bubble" is normally from a totally unexcepted source. To me, this was the greatest take away point -- naturally after every market crash we attempt to learn from our follies. However, the market has also learned and adapted, such that the next market failure is caused by a different set, but the same symptoms are similar to A-Y.
On the negative side, I wished that the latest version did a little better job at editing down the redundancies. For example, the Japanese real estate collapse in the early 1990's was used 5-7 times in different parts of the book -- in many cases, the underlying story was retold, even verbatim. I would disagree with one of the reviewers, that one needs an advanced degree to understand this book, however, an appreciation for economic theory is helpful, particularly monetary policies and capital markets. It does not require up-to-date knowledge of the stock, currencies, or bond markets.
Nevertheless, a good book to keep and re-read every few years. Always worth remembering our past mistakes and trying to create an edge.
Book Description
In 1869, Jay Cooke, the brilliant but idiosyncratic American banker, decided to finance the Northern Pacific, a transcontinental railroad planned from Duluth, Minnesota, to Seattle. M. John Lubetkin tells how Cooke's gamble reignited war with the Sioux, rescued George Armstrong Custer from obscurity, created Yellowstone Park, pushed frontier settlement four hundred miles westward, and triggered the Panic of 1873.
Staking his reputation and wealth on the Northern Pacific, Cooke was soon whipsawed by the railroad's mismanagement, questionable contracts, and construction problems. Financier J. P. Morgan undermined him, and the Crédit Mobilier scandal ended congressional support. When railroad surveyors and army escorts ignored Sioux chief Sitting Bull's warning not to enter the Yellowstone Valley, Indian attacks--combined with alcoholic commanders--led to embarrassing setbacks on the field, in the nation's press, and among investors.
Lubetkin's suspenseful narrative describes events played out from Wall Street to the Yellowstone and vividly portrays the soldiers, engineers, businessmen, politicians, and Native Americans who tried to build or block the Northern Pacific.
Customer Reviews:
Jay Cooke's Gamble.......2007-05-27
Jay Cooke's Gamble covers important background into the North pacific Railroad's history. It does not focus much on the actual railroad operations, but rather the financing and surveying behind the scenes. The author writes in a very readable style and does his subject justice.
The reader will be transported to a time when railroads determined settlement of the American interior. But before the roads could be built, the land had to be surveyed, and in this case the land was also still occupied by natives who wished to preserve their traditional way of life. The reader will encounter a cast of characters ranging from the venerable Jay Cooke himself, to General Geoerge Armstrong Custer, and all the important NP company engineers and surveyors in between. Some were drunkards (the author appears to have a strong bias against alcohol), some prone to mismanagement, and some, like Cooke, never set foot in the land where the action took place. All of this makes for a very entertaining and informative read. One statistic does stand out as being a possible typo: the author on page 274 states land in Bismarck, Dakota was selling for as much as $8000/acre. That figure appears high.
But this is a very good book. One hopes the author will continue on and write the history of the railroad after Cooke's demise and the Northern Pacific's ultimate completion and beyond to its eventual merger with the Great Northern and CB&Q.
Readable History.......2006-12-18
This is one of those special books that is virtually impossible to put down once you start reading. Written in a highly readable, narrative style that puts the reader in the time and place being depicted, this book is the story of Jay Cooke's attempt to build a second transcontinental railroad, known as the Northern Pacific. Present readers may recognize its successor, the Burlington Northern Santa Fe Railroad that just happens to be the largest private landholder in the United States. An integral part of the story is the creation of Yellowstone National Park, the forced Canadian-British effort to build the Canadian Pacific transcontinental railroad, the Panic of 1873, the instigation of the Great Sioux War, and most interestingly, the link between Cooke and George Armstrong Custer that brought him back from the South and, as is said, the rest is history. This is a worthy addition to both national and regional history.
A Tough Comparison..........2006-10-15
Mr. Lubetkin's work is well researched and well written. He's able to weave a narrative together that brings the beginning of the Gilded Age to the Indian Wars and railroad construction... frankly, I had never made the connection between the Northern Pacific and Sitting Bull until I read this book.
However, the final conclusions made me question the depth of the research. Lubetkin identifies the completion of the Northern Pacific several years later, and its competition with the Great Northern, whose surveyors "found" Marias Pass. There is no mention of the railroads' cooperation and attempted merger, nor the landmark Sumpreme Court case concerning Northern Securities and the creation of the ICC. Oh yes, and with reference to the previous review of the map quality, it would have been nice had the book included a larger map or two of the entire proposed routes.
I still believe Pierre Berton's The Last Spike (Canadian Pacific) to be the standard against all railroad construction history books should be measured. If Berton rates a 10, this book is an 8.
If it is Great history you are after, buying this book isn't a gamble.......2006-09-04
Author John Lubetkin has done an excellent job pulling together a widely diverse stockpile of sources and developing in-depth and unique look at the ill-fated attempt to construct the Northern Pacific Railroad in the early 1870s as America's second transcontinental rail link. Other books in the past have extracted the best-known portion of the series of events that constitute this story, namely Custer's 1873 Yellowstone Expedition as recounted in biographies of Custer and Sitting Bull as well as works from the late Larry Frost and John Carroll. The strength of Lubetkin's work lies in its all inconclusive disection of Jay Cooke and his Northern Plains Railroad dream which in no ways detracts from the military events that many of us find so compelling.
In the late 1860s, Cooke had reached the apex of America's banking world, having financed the Union war effort in the Civil War, funding that was crucial in the ultimate victory. He backed the dream, dormant since its 1864 charter, of creating the Northern Pacific Railroad running from Duluth, Minnesota across Dakota Territory, through Montana, Idaho, and ending in the Pacific Northwest.
The author's engaging style and in-depth research combine as he takes us back in time to the full context of the Gilded Age. We witness the brilliant Cooke as he ably finances his dream through repeated bond sales but the reality of what was being paid for soon begins to take its toil--poor management, gross overspending and corruption by those under Cooke, the unanticipated engineering challenges of laying a railroad through Minnesota's boggy, swampy terrain and, ultimately, the will of the the Lakota in resisting the railroad through their prime hunting grounds.
History is fortunate that former Confederate General Tom Rosser was the chief engineer on the 1871 Whistler Expedition and the 1872 Rosser-Stanley Eastern Yellowstone Expedition as well as served at the start of the 1873 Expedition where he was reunited with former West Point classmate, Lt. Col. George Armstrong Custer. The author has delved deep into Rosser's diaries and correspondence from the manuscript repository holdings of the University of Virginia. For those like myself with an interest in the Indian Wars, the large section of this book devoted to these expeditions will prove compelling. An entire chapter is devoted to the 1872 Battle of Poker Flats and is absoluelty fascinating, especially the description of Sitting Bull's calculated act of courage of sitting on the ground, smoking his pipe as soldier's bullets failed to hit him as the battle concluded.
All of this culminates with the 1873 Expedition which proved necessary since staunch Lakota resistance prevented the 1872 foray from completing the survey. The author argues that Eastern newspaper coverage of the intractable Lakotas begin to slowly but surely unnerve Eastern investors who became more and more concerned over the feasiblity of a railroad through hostile territory, a concern that would explode in September 1873 with the worst possible results. The military responded to the 1872 difficulties by sending Custer's 7th Cavalry to the Northern Plains, thus giving the 1873 survey an offensive capability lacking in the infantry companies. This act also placed Custer and his regiment into the heart of the most untamed portion of the country where Custer's 1876 demise would carry him and the 7th Cavalry beyond the realm of history and into legend. Separate chapters on Custer's August 4, 1873 battle near the Yellowstone/Tongue River confluence and the larger battle a week later near the Big Horn/Yellowstone junction do full justice to these events as well as ably demonstrate Custer's ability in Indian warfare. Readers will be somewhat surprised as well as enlightened by the more positive picture of General David Stanley, Custer's superior on the expedition, as he has generally been written off as a hopeless drunk. As this book reveals though, he was able to command effectively when the situation demanded and there is far more to him than my previous knowledge had encompassed.
The book concludes with the return of the 1873 Expedition, the final survey complete but its results of little use until the end of the decade when the railroad was finally completed by a Northern Pacific under different management. For in September 1873, judgement day arrived for both Jay Cooke and Company as well as the U.S. economy as a "Panic" was unleashed on Wall Street, numerous banks, including Cooke's, failed and work on the Northern Pacific ground to a halt, dragging the nation into the depths of a depression that at least one economic historian has judged as second only to the 1929-1932 Great Depression. The author makes the argument that the reports of Custer's two battles, despite their small size and the success of Custer and his regiment, were the last straw in undermining investor confidence in the safety of the area that the railroad was trying to cross.
Excellent and numerous maps by Vicki Trego Hill are included throughout this book and their quality is such that even the most difficult to please cartographer will be satisfied. If there is anything that the author can be faulted on, it is for not including more of the William Pywell photographs from the 1873 expedition but I have to remind myself that this book is on the entire Northern Pacific Railroad effort, not just the Custer expedition. For those wishing to view these photographs as well as gain additional, in-depth, excellent insight into the 1873 Expedition, see Lawrence Frost's CUSTER'S 7TH CAVALRY AND THE CAMPAIGN OF 1873, out of print but available wherever fine rare books are sold, including Amazon as of this writing.
John Lubetkins works are always very well informed and written.......2006-04-07
John Lubetkins literary genious is always very well transferred to his books. I highly recommend all of his books. He puts lots of research into his books and it really shows in the quality and the details. You wont regret picking up any of his books.
Book Description
The financial panics analyzed in this book illustrate the complexity of such events and that the causes are varied: political, military, economic, and even psychological.
Book Description
Contents
Foreword by Jeremy Brecher
Introduction
Chapter 1 The Bloom off the Boom
Chapter 2 Deconstructing the Neoliberal Myth
Chapter 3 The Latest Bust
Chapter 4 Understanding the Crisis
Chapter 5 How Asia Caught the Flu
Chapter 6 The IMF to the Rescue
Chapter 7 What Should We Want? What Should We Fear?
Chapter 8 Mainstream Reform Proposals
Chapter 9 Progressive Reform Proposals
Conclusion Lilliputian Luddites Until Globalization Can Be Built from Below
An Excerpt from Panic Rules! By Robin Hahnel
Boom and Bust
Among economic systems, capitalism is the manic-depressive patient. Exuberance, unbridled optimism, and euphoria are followed by gloom, listlessness, and depression. But no matter how often the cycle is repeated the patient always believes the latest boom will last forever, only to feel foolish again when the bubble bursts. And no matter how often the patient reverts to manic behavior when taken off medication, the economic "psychiatric" establishment eventually succumbs to the patient's pleas to be taken off medication during the "ups"-freeing the exuberant economy from policy restraints-only to insist on placing the patient back on meds-re-application of necessary policy protections-when the unmedicated patient "crashes."
The Latest Boom
The truth is that neither part of capitalism's manic-depressive boom-and-bust cycle is "healthy." Like most capitalist booms, the benefits of global liberalization during the 1980s and 1990s were not all they were made out to be. In fact, most people in the world were worse off economically at the end of the latest boom than they had been when it began-that is, even before the over-hyped boom metamorphosed into the global economic crisis of 1997-98. How is this possible, you ask? We were told "the world economy grew at 3 percent a year in the 1980s and 2 percent in the first half of the 1990s," and that "low- and middle-income economies grew more rapidly, averaging 3.4 percent growth in the 1980s and 5 percent in the 1990s." We were assured that "growth in trade from increased trade liberalization that has gone hand-in-hand with increased private capital flows and financial integration,"
Customer Reviews:
Fine small book!.......2006-02-21
I'll be brief - I concur with the other positive reviews. I came across this three or four years ago and I've really remembered it. Having given to a friend, I thought it was important enough to get a replacement copy recently. Another book in the vein is Joseph Stiglitz (Nobel economist), "Globalization and its discontents". Hahnel gives the better job of pointing out WHY some of the discontents happen - like water flowing down hill or balls falling downward through a pinball machine.
Gives a pretty solid understanding of the global economy.......2001-01-14
Professor Robin Hahnel of the American University in Washington D.C. presents some interesting statistics. He notes that from the early 80's until the Asian economic crises hit in July 1997, much of the world economy was said to be in the midst of an economic "boom" caused by the implementation of neoliberal policies (deregulation, removal of tarrifs and restrictions on capital flows,etc.). Well, according to figures compiled by the Organization for Economic and Commercial Development (OECD), from 1950 to 1973, the year the Bretton Woods system was dismantled and the process of neoliberalization (globalization)began, the average annual gross domestic product per capita of Western European countries was 3.8 percent. From 1973 until 1992, their average annual per capita Gross Domestic product was 1.8 percent. From 1950 until 1973, the average annual per capita gross domestic product in the U.S.A., New Zealand, Australia and Canada was 2.4 percent. From 1973 until 1992 their average annual per capita GDP was 1.4 percent. In Latin America from 1950 to 1973, the average annual per capita GDP was 2.4 percent. From 1973 to 1992 it was .4 percent. The only countries that increased economic efficiency between 1973 and 1992 were the East Asian "tigers" who combined harsh repression of labor, with tax credits and subsidies to export-oriented industries and severe restrictions on inflow and outflow of capital and foreign ownership.
Another statistic. He shows that the annual flow of capital around the world has vastly increased by a large margin since the beginning of neoliberalization in the early 70's; he also shows that whereas before that time, capital was largely used for investment and other long term activities, international capital is now largely used for speculative purposes.
So he shows very clearly that the Bretton Woods period was far more productive for the world economy than the period since 1973. He notes that in the U.S. wages have been stagnant or declining and that while a relatively large number of Americans own stocks, most of it is concentrated in 401k and other retirement accounts, pretty small stuff and that the wealth from the stocks is overwhelmingly concentrated in the top ten percent of the population.
He analyzes what caused the East Asian crises. The East Asian "tigers," under Western pressure, removed restrictions on capital flows, and cut back environmental and labor laws in the late 80's and early 90's and Western capital, mostly speculative, flowed in. Western banks made short term loans to the banks in these countries who made high interest long term loans to export-oriented local businesses. But as one "tiger" deregulated, cut environmental regulations,etc. to compete for Western capital, so did all the others and the boom that many businesses felt was relatively short lived as they faced increasing competition in other countries and were forced to lower prices. They began to have trouble repaying their loans to their local banks who in turn had trouble repaying international creditors. Then Thailand began to wobble and investors, following what Hahnel says is rule one of international finance ",panic first," rapidly sold off its currency, then investors in Malaysia panicked and did the same and then Indonesia and then South Korea..... The economies plumetted and foreign companies were allowed, as a condition for IMF rescue packages, unrestricted access to rush in and buy up local businesess and bargain basement prices. Hahnel presents a particularly interesting article from the New York Times alleging that Robert Rubin and Larry Summers blocked Japanese efforts to create a sort of Asian monetary fund to try to avert the crises at its beginning on the ground that it would interfere with U.S. "influence and interests" and that Japan would not insist on the draconian IMF-style reforms.
He also makes some good points about how the true health of a nation can hardly be measured by the common economic efficiency numbers, noting for instance that a small farmer in the third world ussually lives very poorly and contributes almost no value to the overall economy but still manages to feed himself and his family and is protected by the social safety net of his village. But when his landlord kicks him off the land because the landlord wants to grow expensive export crops and he is pushed into a diseased infested slum in the big city, this will probably increase the GDP.
Unlike the other reviewer, to some extent I really didn't find this book "easy-to-read" and certainly didn't understand everything the learned professor wrote but I feel I have a much more solid grasp of the fundamentals of the economy.
Superb treatment of globalization.......2000-04-08
This is an excellent, easy-to-read, and compelling account of the role international finance played in the Asian Financial Crisis. Hahnel also demonstrates the deficiencies in the IMF response to the crisis. Overall, a superb introduction to globalization, the destructive nature of unregulated capital flows, and the irrationality and instability of the current global economy.
Remarkably comprehensive.......1999-12-25
In a little more than 100 pages Hahnel does an astonishingly impressive job in setting out global economic theory and its current political situation. This is a very informative work.
Hahnel gives us his view of how the global economy works, who benefits from the rules as they currently are, and who loses. He goes on to suggest solutions to what many people perceive as terrible inequality, not only between rich countries and poor countries, but between the wealthy and the not so wealthy across the globe.
He spends some time explaining how the current economic order came about, and what's been happening since "globalization" (as we currently understand it) started about 25 years ago. He explains the Asian financial crisis of 1997/98 and shows how it could happen again.
This book starts with the supposition that one of the primary concerns of those that are wealthy is figuring out ways to hold on to their wealth and increase it if possible.
He does a very lucid job of transitioning from economics to politics and explaining the motivations behind financial and economic political decisions, the effects of which most of us don't understand or see as unimportant.
In short this is a wonderful book for figuring out how globalization effects us, why it's important in our everyday lives and what we can do to make it work for us, the people.
The most engaging book on economics in years, up-to-date and an eye-opening read
Book Description
"Before reading The Panic of 1907, the year 1907 seemed like a long time ago and a different world. The authors, however, bring this story alive in a fast-moving book, and the reader sees how events of that time are very relevant for today's financial world. In spite of all of our advances, including a stronger monetary system and modern tools for managing risk, Bruner and Carr help us understand that we are not immune to a future crisis."
-Dwight B. Crane, Baker Foundation Professor, Harvard Business School
"Bruner and Carr provide a thorough, masterly, and highly readable account of the 1907 crisis and its management by the great private banker J. P. Morgan. Congress heeded the lessons of 1907, launching the Federal Reserve System in 1913 to prevent banking panics and foster financial stability. We still have financial problems. But because of 1907 and Morgan, a century later we have a respected central bank as well as greater confidence in our money and our banks than our great-grandparents had in theirs."
-Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets, and Professor of Economics, Stern School of Business, New York University
"A fascinating portrayal of the events and personalities of the crisis and panic of 1907. Lessons learned and parallels to the present have great relevance. Crises and panics are as much a part of our future as our past."
-John Strangfeld, Vice Chairman, Prudential Financial
"Who would have thought that a hundred years after the Panic of 1907 so much remained to be written about it? Bruner and Carr break significant new ground because they are willing to do the heavy lifting of combing through massive archival material to identify and weave together important facts. Their book will be of interest not only to banking theorists and financial historians, but also to business school and economics students, for its rare ability to teach so clearly why and how a panic unfolds."
-Charles Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia University, Graduate School of Business
Customer Reviews:
An Easy Read on a Complex Subject.......2007-10-10
The authors are professors of economics but they write like novelists. Any one who has been affected by the current subprime crisis should read this book. It will increase your understanding of what is now happening to us, and what is all too likely to happen to us again in the future.
Detailed and Nicely Paced - 'Reads' Like and A&E Documentary.......2007-10-02
Edwin Lefevre's anecdotal account of the cash crunch of October 1907 in his timelessly street smart REMINISCENCES OF A STOCK OPERATOR (1923) has always begged for further commentary. His colorful recollection of how J.P. Morgan "saved" the New York Stock Exchange - "A day I shall never forget, October 24, 1907" - is in this current history placed in the larger context of a more general U.S. monetary crisis. Contributing events included the sudden, unexpected demand for capital following the San Francisco earthquake (1906), a Bank of England decision to slow the flow of gold to the U.S., a recklessly leveraged stock scheme hatched on Wall Street, and the absence of a central banking authority. Plunging asset values, impaired loan collateral values, a general loss of confidence, bank runs, financial ruin, and personal tragedy were the consequences of a "panic" that gripped the markets in that year. Even as one private individual, J.P. Morgan, provided the leadership and liquidity to the banking system, the City of New York, and the New York Stock Exchange, the events of 1907 dramatically underscored the need for a central bank to watch over the monetary needs of the country. The U.S. Federal Reserve as a lender of last resort was created in 1913.
The authors summarize the lessons of 1907 in a final chapter. I'm not sure that new ground is broken here, and the "perfect storm" cliche' is overdone these days, but it can be forgiven in this highly readable account. The point is that multiple contributing causes are in evidence in a financial crisis. Among those causes that stand out are an economy growing strongly where potential risks are marginalized (e.g. the recent mortgage meltdown), financial structures so interlinked or complex that no adequate overview can anticipate the impact of a failure (e.g. the size and opacity of the hedge fund industry), an exogenous shock (e.g. terrorist attacks of 2001), and a financial accident (e.g. a major bank or hedge fund collapse) that crystallizes the risks for the public. Market transparency, coordinated leadership, and adequate regulation are seen as critical elements in slowing the spread of contagion.
The authors don't go out of their way to look for these contemporary parallels, but the links are unavoidable. The strength of this book is that it is a page-turning, 'great read' with the added benefit of providing some useful, cautionary measures to help spot the next financial crisis.
Enjoyable for a Lot of Reasons.......2007-09-21
I would have given the book three or four stars; however, the authors warrant, at least, an extra star or two simply for defining progressives as "some Americans, calling themselves `progressives'..." There is so much in that phrase. It is beautiful writing.
Beyond that, the book is a good general overview of the event, and the authors make a good case for an undeniable thesis - not, despite superficial reviews, that J.P. Morgan saved the world, but that financial crisis are the result of a multitude of factors. With the possible exception noted below, it is hard to argue with the factors that they have identified.
I would offer a few critiques:
First, a nit: I was disappointed that the authors did not circle back and explain how Otto Heinze bungled the squeeze. Did he miscount the number of shares outstanding? Were there fraudulent shares being traded?
Second, an important point: It is impossible to accept the idea that demand for capital can, in real terms, exceed supply and that "excess demand" emanating from real "economic growth" can result in a financial crisis.
The point of the capital markets is to equilibrate the supply and demand of capital by adjusting the price, or cost, of capital. Like any other market, there can never be a sustained excess of supply or demand, so long as prices are freely allowed to adjust. And like any other market, to the extent that there appears to be "excess" demand or supply on a sustained basis, we can rest assured that something is interfering with the pricing mechanism. The authors fail to explore that interference.
In my opinion, it was (as it almost always is) excess "money-creation" by the banking system, which, in turn, artificially reduced the price of capital (kept interest rates too low and stock/asset prices too high), which, in turn, caused intermediaries and entrepreneurs to over-estimate the available supply of capital, creating a false sense of "buoyant growth", which, in turn, caused them to make what appears, after the fact, to have been bad (or speculative or even stupid) investments, given the real state of the economy at the time.
As for the whole J.P. Morgan (that villain!!), Teddy Roosevelt, Upton Sinclair/Sinclair Lewis (those heroes!!!) saga, you can guess on which side I come down. Suffice it to say, it is nice to read a history book published in 2007 that is not knee-jerk in villifying investors and entrepreneurs and knee-jerk in glorifying Government bureaucrats and the we-know-better-than-you class (i.e., progressives).
Morgan did deserve the credit.......2007-09-12
I agree with the previous review on the poor editing of this book. Indeed the kinds of mistakes made are uncalled for. But the previous reviewer need not question the role that Morgan played in the rescue nor the government's weak involvement. One of the surest ways to determine the accuracy of events of long ago is to research what was the generally held opinion at the time of the events. Without exception all parties ( the bankers, Roosevelt, financial journalists, etc) credited Morgan with the victory. Even the normally hostile press and public recognized this. Their good tidings did not last long of course because they knew that Morgan would not live forever. What would they do after he died? Hence the adoption of fellow banker Paul Warburg's recommendations for a Federal Reserve system.
As to the governments lack of involvement. Well, that's logical given that there was no structure in place for the government to work through. It was a 'Wall Street problem'.
For a much better history and analysis of these events read Ron Chernow's 'The House of Morgan', Jean Strouse's 'Morgan', and Carosso's 'The Morgans'. And if you can find a copy, Herbert Satterlee's 'J Pierpont Morgan'. ThESE are the books on the subject.
J. Pierpont Morgan Saves the World.......2007-09-06
This is a very short book about a fairly complex event. While it is accessable to the general reader, the book comes alive only when describing the recovery efforts of a group of private financiers led by J. Pierpont Morgan. More focus is needed to show how the problem developed and to help explain the dynamics of investor panic contagion. Further, government officials are given short shrift as either creators of the problem (President Roosevelt) or as Morgan's lackeys (Secretary of the Treasury Cortelyou).
The authors portray Morgan as a giant among dwarves. He almost singlehandedly ends the panic with visionary, unselfish, decisive and commanding presence. In regard to the latter attribute, Morgan is shown summoning the United States Treasury Secretary to New York, warning short sellers that they will be "properly attended to" after the crisis and ordering bank presidents to work. At one point, Morgan is almost godlike as he decides which savings institutions will be supported and which will be allowed to die.
Thus, The Panic of 1907 becomes the story of J. Pierpont Morgan vs. panic and greed. Government is given little credit for helping solve the crisis (except when the president agrees to interrupt his breakfast to promise he won't interfere with Morgan's plans). As an example of "adverse leadership," Theodore Roosevelt is listed as a primary cause of problems due to "rising regulation of an activist President."
While it may seem like a small error, the authors mistakingly credit novelist Sinclair Lewis with reporting about the meatpacking business rather than Upton Sinclair. This carelessness causes me some concern about other details presented in this work.
The reader knows more about the events of 1907 when he finishes the book but I am not sure that knowledge is balanced. Further, I did not find the lessons for today very applicable or compelling. I think the book would have benefitted from a bit more discussion about causes, effects and implications for the present. I would also be interested in a more nuanced analysis of the motives of Morgan and the other financiers who acted to help turn the corner on the panic but who must bear some responsibility for the state of finances prior to the crisis.
Average customer rating:
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Market Panic: Wild Gyrations, Risks and Opportunites in Stock Markets
Stephen Vines
Manufacturer: Wiley
ProductGroup: Book
Binding: Paperback
 General
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Investing
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ASIN: 0470821523 |
Book Description
An engaging book that offers a comprehensive and provocative analysis of the market panic phenomenon
Why are stock markets regularly gripped by panics? What gives rise to these panics? Are markets becoming more panic-prone? In Market Panic, leading market commentator Stephen Vines provides some unique answers to these questions and shows why panics offer incredible opportunities to stock market investors. He challenges some long-held assumptions about the benefits of investment diversification, offers new ways of understanding the panic cycle, and demonstrates how to predict the onset of panics. Vines also looks at how stock markets are becoming detached from the companies and economies they are supposed to represent, thus building a new and more dangerous form of instability into the market system
Average customer rating:
- PANIC SELLOFFS ARE A CRISIS OF OPPORTUNITY. BUY!!
- Lacks organization
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Panic Profits: How to Make Money When the Market Takes a Dive
John Dennis Brown
Manufacturer: Mcgraw-Hill
ProductGroup: Book
Binding: Paperback
General
| Popular Economics
| Business & Investing
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General
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Stocks
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ASIN: 0070081891 |
Customer Reviews:
PANIC SELLOFFS ARE A CRISIS OF OPPORTUNITY. BUY!!.......1999-03-07
It seems that whenever prices are "too high", I tend to go looking for bargains in the cheap stocks department (read "losers"). Then when the whole market takes a dive, and brings even the strongest stocks down with it, I'm too frightened (or too broke) to think about throwing more money into this "beast" that ate my dreams of early retirement. This book showed me how specific events throughout the 20th century both internal and external to the market have over and over again provided excellent buying opportunities for those quality stocks you wished you had bought way back when they were so much cheaper. In a test of real life application, it gave me the historical perspective and confidence to jump in and buy at a time when everyone else was bailing out. It was largely responsible for my purchase of the two leading Internet portal stocks near their Oct 98 market crash lows; and my ability to buy the leading online "bookseller" (starts with an "A", and ends with an "mzN") at its exact bottom (less than a point) during the Feb 99 technology selloff. When applied to high quality growth stocks, "Panic Profits" offers you a fast, safe, and very simple (I love that word) approach to making big money in the stock market. Some gems of wisdom contained in this book: * "It's never too late to sell on a rally". * "Reflex rallies in the most hammered stocks offer ultra quick reliable profits". * "Rewards come from contrary action, not from sophisticated or complex strategy or analysis". * "IPO's & new ideas require more time, money, management, etc. than early investors ever expect". * "Recognize rolling declines of a bear market. Bear markets will bleed you to death - SELL!". * "Panic selloffs tend to periodically cleanse the market of weak money, and sets up for the next big advance". In my experience, the market sells off once or twice a year. "Panic Profits" will help you be prepared for the next big "opportunity", to see through your fear, and to act wisely (and profitably). It's simple. It works. I love this book.
Lacks organization.......1998-08-30
While the author has tons of documentation about panics and bear markets, he fails to draw conculsions and suggestions together. Advice is scattered hither and yon. It looks like a collection of short pieces stuck together. It would have been much more useful to summarize the findings and organize the evidence behind it. This book doesn't know if it is history or "how to" book. However, it is the best (maybe only) summary of past panics and bear markets so it is good to have in an investor's library.
Book Description
During the economic depression of the 1890s and the speculative frenzy of the following decade, Wall Street, high finance, and market crises assumed unprecedented visibility in the United States. Fiction writers published scores of novels in the period that explored this new cultural phenomenon. In Panic!, David A. Zimmerman studies how American novelists and their readers imagined--and in one case, incited--market crashes and financial panics.
Panic! examines how Americans' attitudes toward securities markets, popular investment, and financial catastrophe were entangled with their conceptions of gender, class, crowds, corporations, and history. Zimmerman investigates how writers turned to mob psychology, psychic investigations, and conspiracy discourse to understand not only how financial markets worked, but also how mass acts of financial reading, including novel reading, could trigger economic disaster and cultural chaos. In addition, Zimmerman shows how, by concentrating on markets in crisis, novelists were able to explore the limits of fiction's aesthetic, economic, and ethical capacities. With readings of canonical as well as lesser-known novelists, Zimmerman provides an original and wide-ranging analysis of the relation between fiction and financial modernity.
Books:
- Miracle's Boys
- Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics
- Pathologies of Power: Health, Human Rights, and the New War on the Poor (California Series in Public Anthropology, 4)
- Quicken Willmaker Plus 2007 Edition: Estate Planning Essentials (Book with CD-ROM)
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- Sea of Thunder: Four Commanders and the Last Great Naval Campaign 1941-1945
- Selling China: Foreign Direct Investment During the Reform Era (Cambridge Modern China Series)
- Suburban Warriors: The Origins of the New American Right (Politics and Society in Twentieth Century America)
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