Wednesday, October 07, 2009

The Great Crash of 1929 by John Kenneth Galbraith

An informative but mostly uninteresting account of the great crash of 1929. Of course, it really depends what one is seeking. I think I wanted more overview and analysis of the events that are thought to have caused 1929, the repercussions and to gain insight into patterns that might occur in the market (and human psychology surrounding it). 1929 did do this, but you need only read the first 10-15% and the final 20% if that’s what you want.

I did learn that although many newspapers were caught up on the speculation bubble, the NY Times was not. It warned of collapse and tried to warn people. Many advocating a position antithetical to infinitely increasing returns were castigated for their warnings.

Additionally, some things don’t change. Overpaid bankers believing they aren’t overpaid and those within the industry helping their friends to become rich or not getting caught.

A good excerpt: "The striking thing about the stock market speculation of 1929, the not the massiveness of participation, but the way it became central to the culture."

Finally, Galbraith does a good job of discussing why things might have turned out and how the Depression was related to the crash. One of the interesting points was that, due the large income disparity, much of the economy’s growth was related to luxury spending by the rich. Consequently, when they started to lose money, the whole economy suffered the reverberations.
A good book for those really interested in the topic. If less curious, read the beginning and the end while skimming the middle.


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