Among other observances, the first anniversary of the stock market's spectacular and chilling fall from grace will be marked...


BLACK MONDAY: The Catastrophe of October 19, 1987. . . And Beyond

Among other observances, the first anniversary of the stock market's spectacular and chilling fall from grace will be marked by publication of Metz's telling retrospection. While The Wall Street Journal correspondent relies on the firsthand observations of key participants to provide an hour-by-hour account of the crash, he offers a wealth of perspectives on the implications as well as the circumstances of the debacle. Particularly notable is the persuasive case the author makes for the likelihood that the October 20 midday rally, which averted a complete collapse of the global financial system, was rigged at least in part. Equity prices (as measured by the Dow Jones Industrial Average) plunged nearly 23% on October 19, 1987. On the worst previous day (1929's Black Tuesday), the DJIA dropped less than 13%. Metz logs the experiences and emotions of influential people overtaken by events well beyond their control. His lineup includes the likes of John Phelan (Unflappable chairman of the New York Stock Exchange), a Big Board specialist charged with maintaining orderly markets in scores of blue-chip issues; E. Gerald Corrigan (president of New York's Federal Reserve Bank and a hero of the piece), a member of the Chicago Mercantile Exchange who trades in futures on the S&P 500 (an index contract that often exacerbates the latter-day volatility of Stock prices); and WSJ colleagues covering the biggest story of their lives. In reviewing the devastation of the world's flagship capital market, Metz fingers the usual suspects--arbitrageurs, program traders, portfolio insurance, panic-prone money managers, et al. His greatest contribution, though, is providing details that reduce an investment disaster whose dimensions still defy belief, let alone comprehension, to a human scale. After the close on Black Monday, the author recounts, dazed young men remained in the pits trying to sell Rolex watches, condominiums, or other personal possessions to meet margin calls. In the meantime, the AP computer--programmed to reject obviously erroneous quotes--proved incapable of posting final stock prices, so the job had to be completed by hand. Reportage of a very high order, as engrossing as it is enlightening.

Pub Date: Oct. 19, 1988


Page Count: -

Publisher: Morrow

Review Posted Online: N/A

Kirkus Reviews Issue: Sept. 15, 1988