I don’t mean to namedrop but Mark Thomas* recommended this book to me, backstage at the Bloomsbury before Christmas. He said it was the definitive book on the current global financial crisis, in that it’s the definitive book about the previous one, in 1929. The Great Crash 1929 by JK Galbraith proved a very quick first book of 2009. I couldn’t stop reading it. It’s not that long anyway, and Galbraith’s style is such a breeze, especially for an economist. The parallels between the original crash and our current one are astounding. Both booms were built on unregulated banking and speculation, and both busts came about because nobody in the financial services sector wanted it to stop and nobody wanted to be the spoilsport who stopped it, so they kept on going, treating the stock market like a roulette wheel and sitting back and counting their money while investment firms spread their investments among another layer of investment firms until nobody actually had any real money in their hands any more, it was all hypothetical and the whole edifice came crumbling down.
Either today’s brokers and money-jugglers have never read this book (if they have time to read a book when there’s all that shouting and looking at screens to be done), or, like the speculators and get-rich-quick schemers of 1929, they have their fingers in their ears and are going la-la-la-la. Galbraith’s book was written in 1954, and he was amazed then that so little had changed, when the Crash was only 25 years in the past. I wonder what he’d have made of today’s little difficulties?
* Mark’s new series of interviews on matters fiscal, It’s The Economy, Stupid, are available as podcasts here and from iTunes.