大恐慌前夜―窮極の大相場 単行本 – 1987/11
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Several books have been written on the crash itself but non before has dealt with events leading up to it.The era of the 1920s was one of economic growth, and not merely tinsel and ballyhoo. For most of the period, stock market prices were not unreasonably high and investment capitalism matured and took on its present-day power. It was Wall Street's silver age.It was also and age of time purchases and of buying stocks on margin; an age when both practices were abused, but when Wall Street was no worse than Main Street. It was a period when government would not take major steps to correct the abuses and excesses. The few decisions made by the Federal Reserve were neither timely nor wise. A head of steam was building up for which there was no safety valve.When the great crash came it was not directly followed by an economic collapse. During the next year, government and business did nothing of importance to prevent the depression, whose severity could not be attributed to Wall Street. --このテキストは、ペーパーバック版に関連付けられています。
The strength and the weakness of the book is that it focuses exclusively on the factors contributing to the Great Bull Market of the 1920s. Therefore the first World War is merely a forethought and the Depression is merely an afterthought. Concurrent events, such as the recession in American agriculture through most of the 1920s, are largely absent unless they are directly effecting stock prices.
Even with those restrictions on his scope Robert Sobel presents a wide variety of factors driving the 1920s boom. Some advocates of Roosevelt's New Deal have attempted to re-write the 1920s as a speculative bubble. Robert Sobel makes a compelling case for true economic growth in that period. Factors include increased urbanization (1920 was the first time more than 50% of Americans were urban dwellers), adoption of the automobile and the spread of electrification. At the same time consumer credit, particularly for automobiles and electric appliances, increased demand. Tax changes by Treasury Secretary Andrew Mellon increased corporate profits and reduced taxes on consumers capital gains. Valuations (i.e. price earnings) were low, by historic standards, at the start of the decade but increased over the decade. Part of this was due to expectations of growth but also the availability of "call loans" (i.e. margin loans) to investors. The only area of the book was has aged is Robert Sobel's comparison of those 1920s valuations with those in the mid-1960s (themselves extremely high due to the "Nifty Fifty", such as Polaroid and Xerox, at the time of writing).
Robert Sobel's conclusion is that the stock market in 1929, while momentarily over valued, was fundamentally sound. After the "crash" the stock market proceeded to recover by year end and therefore it appears that his conclusion was correct. If the market was sound Robert Sobel's conclusion was that the institutions were weak. Specifically the New York Fed was keeping interest rates low (principally to help economic conditions in Europe) and this resulted in a flood of cheap money. Banks then used this money as call loans in the stock market. The President and Congress took a "hands off" approach inasmuch as the booming stock market made all of their voters happy.
Modern readers will undoubtedly draw a parallel of Alan Greenspan and the Fed flooding the markets with low cost money, the banks lending that to homeowners on increasingly easier terms and the President and Congress doing nothing as homeowning voters were happy.
Those who do not learn from history are doomed to repeat it!
1) A notion that everyone should and could get rich
2) that hard work and risk as a pre-requisite for gaining wealth was a thing of the past -- indeed, inside the large brokerages it was loudly spoken that such older ethos' were not part of modern Wall Street.
3) supplanting risk and hard work was an ethos of power elites that scrathed each other's back. And that was assumed to be part of the normal healthy business processes.
4) There was a general overall lack of attention to detail and people working through the risks of financial euphoria.
In addition, unlike Galbraith, Sobel says that the powers that be actually made good choices, that the falls were really not as bad as they were made to look at the time.
It is a well written and cogent analysis of this exciting time.
According to Mr. Sobel, this was, in a nutshell, the mentality of the average investor. Investment houses and financial institutions fueled the fire by making margin cheap and easy. Ultimately, stock prices were held up by nothing. Tremors of instability began to ripple through the market as the impending crash approached, often dismissed as buying opportunities. Ultimately, reality set in, and the unthinkable happened.
Are things different today? Yes and No. More safeguards would seem to be in place, however valuations of today make those of the 20's look miniscule. While a direct comparison is difficult to make between the period covered in the book, and the market of 2000, there are lessons to be learned. "The Great Bull Market" provides a fascinating account of the crash and the events that led up to it. A must read for anyone feeling a little jittery about the climate on Wall Street today!
Of course, there are wider things to consider than the rather simplistic and sometimes left-wing views put forward here. Even so, The Great Bull Market does take you away from the now perfunctory trawl through margin statistics and takes you into the heads of those who were actually parting with cash. For that it's a great read.