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Origins of the Crash: The Great Bubble and Its Undoing (平装)
by Roger Lowenstein
| Category:
Stock market, Wall Street, Investment banking, Popular economics, History |
| Market price: ¥ 158.00
MSL price:
¥ 128.00
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| Stock:
Pre-order item, lead time 3-7 weeks upon payment [ COD term does not apply to pre-order items ] |
MSL rating:
 Good for Gifts |
MSL Pointer Review:
Easy to read and entertaining, this book is a good historical account of the highlights of the 90s dot-com boom and bust.
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AllReviews |
1 Total 1 pages 5 items |
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Publishers Weekly (MSL quote), USA
<2008-04-08 00:00>
Well-known financial journalist Lowenstein (Buffett; When Genius Failed) sets out to explain the stock market crash of 2000 and the ensuing corporate scandals. The ingredients are familiar: executive overcompensation and stock options, irrationally exuberant shareholders, friendly auditors, short-term focus by financial professionals and overemphasis on shareholder value. The author puts his unique stamp on these factors by juxtaposing them so brilliantly that the 20-year history that inflated the bubble seems not just understandable, but inevitable. The story is traced from the doldrums of the 1970s through the raiders and junk bonds of the 1980s to the financial brave new world of the 1990s. In self-conscious parallel to John Kenneth Galbraith's The Great Crash, Lowenstein explains that it is the boom that needs to be explained; the crash is simply the natural consequence. Lowenstein's low-key ease with the most complex financial reporting makes this book both accurate and easy to read, just as his earlier Buffett revealed a fascinating character where other writers saw only dullness, and his Where Genius Failed was a very comprehensible account of the 1998 Long-Term Capital Management blowup.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. |
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Booklist (MSL quote), USA
<2008-04-08 00:00>
Lowenstein traces the origins of the trend that fueled the great stock market boom of the 1990s, which ultimately led to the dot-com bubble, the collapse of Enron and Worldcom, and the exposure of corruption that followed in its wake. Back in the 1970s, stocks were in such disfavor that one columnist was moved to write a piece called "The Death of Equities." At that time, no one expected history to repeat itself, but the dire conditions gave rise to the largest financial boom-and-bust cycle in history. The takeovers and leveraged buyouts of the 1980s played a role in the resurgence of the stock market, but the granting of stock options to CEOs as incentive for growth played a bigger part in what was to come. Finally, corporations wishing to transfer control of pensions to individual employees through 401(k) programs pegged the performance of millions of ordinary workers' investments to the stock market and created a cult of equities on a massive scale. Lowenstein creates intriguing portraits of the players in this larger-than-life culture. David Siegfried
Copyright © American Library Association. All rights reserved |
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BusinessWeek (MSL quote), USA
<2008-04-08 00:00>
A crucial account of an era of excess and folly...riveting...will only seem fresher with time.
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R. B. Watson (MSL quote), USA
<2008-04-08 00:00>
Great read! I have been a financial advisor for over 15 years and love the markets and their history. Lowenstein has written two fabulous books about market changing events over the past decade, and "Origins" could be the best. For me, it was like reliving the boom (and bust) all over again; at times painful, very insightful, but not too techinical. Also, the section devoted to Enron was spectacular. |
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Amore Roberto (MSL quote), USA
<2008-04-08 00:00>
It was already some time I wished to read this essay, both out of interest for the argument and because of the fame of Lowenstein as a very conscientious journalist.
I must confess I have been totally satisfied with this work and, while warmly recommending to other readers, I look forward to read some of his other books (specially the one about LTCM collapse).
The essay is compact (just 227 pages), easily readable and extremely interesting, since the author has obviously a huge in depth knowledge of the argument and his style is extremely balanced and pleasant.
Lowenstein shows a very impartial approach: there's no rhetoric, no overtones, no moralistic attitude (like usual themes of pride punished) but produces many hard data and clever evaluation arranged carefully to build a very powerful case.
Because of this approach, the book is probably the best account of the 1990s bubble I have had the chance to read.
"The Origins of the Crash" is specially a report of how the financial bubble formed and grew, to ultimately bust at the beginning of the year 2000 in the way everyone knows.
Lowenstein traces the origins of the troubles to come in a cultural shift that occurred in the late `80s:
- the impact of LBO creating pressure on CEOs, coupled with new theories as "shareholder value" and EVA;
- a shift from cash bonuses to stock options (and often not only so) for CEOs and attitudes focused on hard competition, "creative destruction" (stressing more on change than stability) and easy profit, more than self-sustaining quality and long term growth;
- governmental deregulation (specially the repeal of Glass-Steagall Act, benign neglect on possible conflicts of interest and globalization of financial markets);
- the coming of age of the new free market economics and their easy faith in the self-correcting capacity of markets (but I would add as well theories of risk management, that gave the false belief to be able to overcome and manage financial stresses, and the distortions on stock market prices caused by the use and abuse of derivatives).
Given the frame, disaster comes to be almost inevitable:
- shareholder value is narrowly interpreted and implemented as the effort to inflate stock prices (the best - and safest - manager is not the one with best result but the one with the best track record of stock prices)
- shareholder value, with its emphasis on prices, causes a shift form long term to short term in a hectic chase for steady and consistent business results;
- deregulation opens the way to conflicting interests: in corporate governance (internal audit, CEOs, President), outside the company in the balance of mutual checks (external auditing companies offering as well professional consulting to the same customer and pretending, while so doing, to remain "objective"), repeal of Glass Steagall and dismissal of "Chinese walls" between commercial banking and financial analysis).
To this explosive mix you just have to add a long bull market: drunken by the returns of the stock market over a 10 years span, no investor, few financial analyst and even fewer government officials complained about the many warnings of problems to come.
In every financial bubble there is an economic side of the story, as well a psychological profile.
The psychological side tells the usual story of all the former financial bubbles: easy faith, unwarranted optimism, invention of new paradigms ("the new economy") and of new evaluative methods to account the unaccountable.
But this part is the least developed by Lowenstein, since his main interest is in exposing the fundamental problems in corporate governance, and not in describing passing (or recurring) fashions.
So if you search for a story about rocketing of stock market prices, followed by their rapid sinking, I fear you'll be disappointed: this book is not involved in security analysis proper or in the evaluation of the markets, and neither tries to give advice on how, where and when you should invest your money.
If you've been so patient and kind to follow me so far, there can be a chance you share some interest in the argument. If so, I think that these titles I had the chance to read in the past, could be of some significance to you as well:
- J.K.Galbraith - "The Great Crash 1929".. The official story of the great bubble of the 1920s
- M.Dash - "Tulipomania". A lively story of the first recorded western financial bubble: tulips in XVII century Holland.
- E,Chancellor - "The Devil Takes the Hindmost" - a colorful and well-informed essay focusing specially on the XIX century.
- Ch.P.Kindleberger - "Manias, Panics and Crashes". Very interesting, but beware the title: it is a very specific essay on management of financial crises.
- Robert Shiller - "Irrational Exuberance". Possibly one of the most interesting books published in the last years: while I don't like too much behavioral finance, yet the first 50 pages are well worth many times the book price.
- J.A Paulos - "A Mathematician plays the stock market". Avoid this book! Too cheap and sometimes silly. Not worth the money.
- Burton J. Malkiel - "A Random Walk down Wall Street". Usually the first chapters of this evergreen are dedicated to financial manias.
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1 Total 1 pages 5 items |
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