Are there any lessons to be drawn? Yes, many. But as long as the culture “tolerates lying, even in seemingly marginal ways,”...




A wide-ranging examination of the stock-market boom of the 1990s and its resounding crash.

Ken Lay, Jack Welch, Steve Case, and their ilk may have been the guys who burst the great bubble. But, writes former Wall Street Journal reporter and current Smart Money columnist Lowenstein, “It was not merely that many companies, or many Wall Street operators, misbehaved; it was that the very culture encouraged the misbehavior and was, in large measure, its accomplice.” Whereas Americans had fled the market in droves in the stagflationary ’70s (by 1979, Lowenstein notes, most of the money held in pension funds was in “bonds, bills, and cash, which was practically like stuffing it under a mattress”) and had only reluctantly come back in the ’80s, by the end of the first Bush administration they would embrace the stock market wholeheartedly, so much so as to be ruled by it. With that change of attitudes and allocations and the concomitant demand that the market make everyone rich, as bullish ’90s boomers promised, the whole world of finance changed: auditors, analysts, and accountants came under extraordinary demands to fudge the books, and the ever-evolving procedures of federal watchdog agencies seemed calculated to encourage them to do so. Cries for reform were sounded throughout the period, Lowenstein notes, but efforts to square the books were quashed by the likes of Sen. Joseph Lieberman, “a big recipient of Wall Street and accounting industry contributions” who is now talking a good game about cleaning house. Meanwhile, CEO salaries swelled, companies that “were worthless from start to finish came to be valued in the billions of dollars,” and honest financial reports became objects of exquisite rarity—all aspects of madness-of-crowds behavior that Alan Greenspan’s phrase “irrational exuberance” only begins to cover, but that Lowenstein describes in pointed detail.

Are there any lessons to be drawn? Yes, many. But as long as the culture “tolerates lying, even in seemingly marginal ways,” Lowenstein suggests, the great humbling of 2002 may foretoken worse to come.

Pub Date: Jan. 12, 2004

ISBN: 1-59420-003-3

Page Count: 272

Publisher: Penguin Press

Review Posted Online: May 20, 2010

Kirkus Reviews Issue: Nov. 15, 2003

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Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...


A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.

The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.

Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.

Pub Date: Nov. 1, 2011

ISBN: 978-0-374-27563-1

Page Count: 512

Publisher: Farrar, Straus and Giroux

Review Posted Online: Sept. 4, 2011

Kirkus Reviews Issue: Sept. 15, 2011

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Essential reading for citizens of the here and now. Other economists should marvel at how that plain language can be put to...

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A French academic serves up a long, rigorous critique, dense with historical data, of American-style predatory capitalism—and offers remedies that Karl Marx might applaud.

Economist Piketty considers capital, in the monetary sense, from the vantage of what he considers the capital of the world, namely Paris; at times, his discussions of how capital works, and especially public capital, befit Locke-ian France and not Hobbesian America, a source of some controversy in the wide discussion surrounding his book. At heart, though, his argument turns on well-founded economic principles, notably r > g, meaning that the “rate of return on capital significantly exceeds the growth rate of the economy,” in Piketty’s gloss. It logically follows that when such conditions prevail, then wealth will accumulate in a few hands faster than it can be broadly distributed. By the author’s reckoning, the United States is one of the leading nations in the “high inequality” camp, though it was not always so. In the colonial era, Piketty likens the inequality quotient in New England to be about that of Scandinavia today, with few abject poor and few mega-rich. The difference is that the rich now—who are mostly the “supermanagers” of business rather than the “superstars” of sports and entertainment—have surrounded themselves with political shields that keep them safe from the specter of paying more in taxes and adding to the fund of public wealth. The author’s data is unassailable. His policy recommendations are considerably more controversial, including his call for a global tax on wealth. From start to finish, the discussion is written in plainspoken prose that, though punctuated by formulas, also draws on a wide range of cultural references.

Essential reading for citizens of the here and now. Other economists should marvel at how that plain language can be put to work explaining the most complex of ideas, foremost among them the fact that economic inequality is at an all-time high—and is only bound to grow worse.

Pub Date: March 10, 2014

ISBN: 978-0-674-43000-6

Page Count: 640

Publisher: Belknap/Harvard Univ.

Review Posted Online: April 30, 2014

Kirkus Reviews Issue: May 15, 2014

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