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1 of 1 people found the following review helpful
5.0 out of 5 stars Origins of the Crash: The Great Bubble and Its Undoing
Lowenstein, a well-known author and financial columnist, has crafted a lively and readable account of the last 30 years on Wall Street. Starting with the creation of 401(k) accounts, proceeding through the boom years of the 1990s, and then moving to the downfall of Enron and its brethren, he ties in the various factors that have inexorably led us to where we are today...
Published on April 20 2004 by B. Viberg

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3.0 out of 5 stars A good overview that lacks new details.
As a regular reader of the Wall Street Journal, I found this book to be too high-level for my liking. There is no real insight here as to what happened during the 1990's in the US financial markets, just a general rehashing of what I read in the WSJ. Given that, if you are unfamiliar with what went on this book would serve as good overview, but don't think you are going...
Published on March 20 2004 by Jeff Potter


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1 of 1 people found the following review helpful
4.0 out of 5 stars dry, acerbic wit accurately dissects the money culture, June 22 2004
By 
D. Friedman (New York, NY United States) - See all my reviews
(REAL NAME)   
This review is from: Origins Of The Crash (Hardcover)
This is a really good, introductory book that explains the whole money culture of the 90s, its origins, and many of the seemingly absurd and illogical justifications used by various players to justify the bubble that permeated Wall St.
It is quite informative, always entertaining, and Lowenstein's wit and acerbic sense of humor make one chuckle at the outrageousness of some situations.
That said, the book, while descriptive, is not prescriptive: it does not offer much in the way of solutions to the issues so eloquently raised in its pages. It is quite easy, after all, to determine that a hitter swings his bat too wildly to make contact with the ball; it is much harder to tell the batter how to make contact with the ball. Describing the history and culture that gave rise to some of the more egregious practices of the past ten years is certainly informative; however, such descriptions merely contextualize the problem and do little to advance debate on how to overcome such problems.
For example, Lowenstein quite correctly points out that one big cause of the mania for shares was managers' sudden infatuation with hitting quarterly earnings targets...which fascination these managers fixated on because the Street told them that is the yardstick by which they would be judged. So? Good analysis, good explanation that the logic implied in the relationship between managers, their colleagues on the street, and the maniacal focus on hitting earnings targets is self-referential if not outright incestuous. But Lowenstein does not take this argument to the next step: what do we do to cut off such self-referential silliness as that which is described?
That is a discussion he does not approach, and one that neither he nor anyone else seems to have. History, of course, will judge if the corporate reforms as of late, such as Sarbanes-Oxley and the focus on corporate governance will have the desired effect.
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1 of 1 people found the following review helpful
5.0 out of 5 stars Origins of the Crash: The Great Bubble and Its Undoing, April 20 2004
By 
B. Viberg "Alex Rodriguez" (New York, NY United States) - See all my reviews
(REAL NAME)   
This review is from: Origins Of The Crash (Hardcover)
Lowenstein, a well-known author and financial columnist, has crafted a lively and readable account of the last 30 years on Wall Street. Starting with the creation of 401(k) accounts, proceeding through the boom years of the 1990s, and then moving to the downfall of Enron and its brethren, he ties in the various factors that have inexorably led us to where we are today. While none of this is new information, Lowenstein includes enough personal details to make it seem fresh and interesting. The last chapters are particularly relevant, covering the fallout when the various deals and compensation scandals came to light. The effect of 9/11 on the government and the country in general is also touched on, particularly with regard to the rising budget deficit. Finally, an epilog discusses the fines and reforms (including the Sarbanes-Oxley Act of 2002) that resulted from the various debacles and opinions about what else must be done. The book is heavily documented throughout with quotes and sources, making it authoritative as well as informative. Recommended for public libraries.-
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5.0 out of 5 stars The Clinton boom wasn't a boom - it was a sham., May 31 2004
By 
This review is from: Origins Of The Crash (Hardcover)
What really caused the great stock market bubble of the 90s? Who was responsible for the economic growth of that decade? Who are the villains that robbed millions of their life savings?
Lowenstein weaves a stomach turning tale of rampant dishonesty and criminality; individual, corporate and political greed; the willful failure of law enforcement on the federal level; the blindness created by greed and exposes the myth of the so-called Clinton boom years.
In the end, Lowenstein shows how the Depression-era laws intended to protect the public against stock swindles were simply ignored by the Clinton Administration. Sharp-witted corporate executives learned that they could loot the companies they ran in behalf of the shareholders and the shareholders themselves. The investment bankers learned that they could tout stocks with impunity, no longer having to fear being penalized for lying about the companies they cheered and simply turning a blind eye to accounting arcana and bad news. The accounting and legal professions, supposedly self-policing, dedicated themselves to finding ways to make dung look like gold, even if they couldn't remove the smell. The media, with its legions of financial "reporters" and their dependence on the advertising revenue of the very businesses they reported on, did no fact checking of their own, but simply parrotted the lies they were fed.
And the government? Then President Clinton and legislators simply took the donations of the very people who were fomenting the bubble - and turned a blind eye to enforcing the laws.
Several thousand people grew very, very rich from all this chicanery - while millions lost money, sometimes disastrously so.
Lowenstein describes how it all began with the inflation of stock options awarded to executives. It didn't take long for corporate executives with compliant boards, lawyers and accountants to realize that a seemingly unlimited flow of wealth was waiting to be tapped. The investment bankers and stock analysts saw - as it always has been - how stock prices could be run up without a whit of truth supporting their claims. Buy, buy, buy became the mantra to the public - while the folks on the inside saw profit on every transaction.
Enron and Worldcom were but the largest perpetrators of this sham on the company side, assisted by legions of lawyers who sought loopholes, accountants who looked the other way, stockbrokers who didn't care as long as the public kept buying - and regulators and politicians who lined their own pockets.
It's a sad tale of the Clinton boom. It never was what it was publicized as being - it was a sham and millions of ordinary people are the poorer for it. But not the fat cats in the White House, Congress, the brokers or the others who pulled it off. A few may ultimately go to some country club jail, but they'll be able to afford whatever they want from the commissary.
Jerry
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2.0 out of 5 stars Could Have Used Some Empiricism, April 2 2004
By A Customer
This review is from: Origins Of The Crash (Hardcover)
Lowenstein believes, among other things, that the chairman of the board and the CEO of a corporation ought to be two different people.
On that basis, he ought to approve of Enron's decision to separate the two posts, early in 2001. Skilling was never the chairman of the board of Enron. He was the CEO and Kenneth Lay was the chairman.
Lowenstein doesn't connect those dots. But he does ask us to consider "how inappropriate would the description President and Chief Justice sound, or Head Coach and Quarterback. The board's job, like that of the coach, is to monitor those on the field....Indeed, the merging of these roles in America stands out as a unique institutional mistake." In his view it has helped create the star-quality of CEOs which in turn made star-worshipping investors eager to part with their bucks in return for overpriced stocks.
Lowenstein might have done something more than given Ken Lay this accidental pat on the back. He might have offered some empirical evidence of the badness of such merging. He might, for example, have cited two corporations who faced similar circumstances otherwise - one with a chairman who was also CEO, the other with a severance of the two positions. If the former company suffered from a bubble-and-bust that the latter company avoided, that fact would be germane for empiricists. Or he might have referenced corporate earnings or productivity or any other measure of anything valuable tends to increase when the two roles are severed. But he doesn't. One need not expect empiricism from an author pushing a hot thesis.
Instead, there is a good deal of discussion of the absurdly high salaries CEOs make these days, which prove (he thinks) that boardrooms have become excessively chummy places. Indeed, he can play heads-I-win and tails-I-also-win. If Skilling had been chairman as well as CEO, his subsequent indictment would show why those roles should never be combined. But since in his case they weren't combined, the same facts show ... what? Apparently that they should be occupied by non-chums, by people who are wary of one another.
This is a demand that we don't make in the case of a head coach and a quarterback. If they are both sharing in the credit for a winning team performance, they are likely to feel rather chummy. As for their salaries, that will be determined by the supply of people capable of doing their jobs, and the demand for getting those jobs done.
Of course, in the case of Enron in early 2001, they were NOT getting the job done, they were only pretending to. But Lowenstein doesn't have a handle on the whys and hows of that.
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4.0 out of 5 stars A Great Summation, April 1 2004
By 
This review is from: Origins Of The Crash (Hardcover)
Having read "When Genius Failed", I looked forward to this book. What this book does a great job of is a summation of the market from the 70s forward. It could be a great additional reading book in a college finance class as you will learn quite of what to do and not do.
But where the book may have missed its mark is there is no new ground covered. "When Genius Failed" covered a very intricate subject and went in to great depth to explain. The multitude of subjects did not give Lowenstein that option for this book so it reads similar to long newspaper exposes with some additional commentary.
Overall I enjoyed this book and recommend it. But please make sure it matches what you are looking for. A good history summation is what you have.
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3.0 out of 5 stars A good overview that lacks new details., March 20 2004
By 
Jeff Potter (Smithfield, RI USA) - See all my reviews
This review is from: Origins Of The Crash (Hardcover)
As a regular reader of the Wall Street Journal, I found this book to be too high-level for my liking. There is no real insight here as to what happened during the 1990's in the US financial markets, just a general rehashing of what I read in the WSJ. Given that, if you are unfamiliar with what went on this book would serve as good overview, but don't think you are going to learn anything new if you already have a familiarity with the topic.
One point I did disagree with was how Lowenstein gave Clinton a pass (the scandals did occur on his watch) but seemed to pile on Bush for not being aggressive enough in cleaning them up. A valid argument can be made for the later, but giving the Clinton administration a free pass harks of bias.
I also think Lowenstein fails to link the artificially high stock prices of non dot-com companies with that of dot-com companies. I am of the opinion that one reason many companies inflated their earnings, and subsequently their stock price, was to keep up with the high growth rate of the dot-coms. Why would someone buy Enron growing at 10% a year, when I can have Yahoo growing at 50% a year? To compete with that kind of grow and make their stocks more attractive (aside from enriching themselves on options) executives baked the numbers.
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5.0 out of 5 stars Lowenstein does it again, March 10 2004
By A Customer
This review is from: Origins Of The Crash (Hardcover)
For lovers of Lowenstein's other books (When Genius Failed and Buffett) this page turner will not disappoint. Lowenstein has a true gift. Not only does he make the financial layperson comprehend the complicated world of off balance sheet partnerships and corporate boardrooms, he makes it exciting ... and it isn't even fiction! A job well done.
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5.0 out of 5 stars The 1990s Market Bubble--How to 'Get It', March 9 2004
This review is from: Origins Of The Crash (Hardcover)
The stock market bubble of the late 1990s represented one of the most intense periods of broad-based irrational behavior since the 1920s, and the fallout from the bursting of the bubble likely kicked off the 2001 recession, cost thousands of employees their jobs, and cost untold investors large amounts of their hard-earned savings (I'd suggest well upwards of $1 trillion). How could something so irrational happen in this day of enlightenment? Roger Lowenstein, one of the best financial authors for the lay person, has done an excellent job of describing and detailing the elixir of half-truths, conflicts of interest, shabby corporate governance and outright fraud that intoxicated many investors. More specifically, Lowenstein provides a highly readable explanation of how too many corporate managers and directors, rather than working in the interests of their shareholders, became looters of shareholder wealth via misleading financial statements, excessive use of stock options and other shenanigans. He also does a good job illustrating how hopelessly conflicted some Wall Street analysts, and even public accounting firms, became during the wild-and-crazy times. The chapter on Enron, a must-read all by itself, will provide a lot answers to those who wonder how such a massive corporation could collapse in this age.
To those who already know about the various roles played by Jack Grubman (a very influential Wall Street analyst), Arthur Levitt (the SEC chair during much of the 1990s), Andy Fastow (Ernon's financial alchemist) and Billy Tauzin (an influential Congressman), you will most likely find this book easy, lively reading. For those who are not already familiar with these people and with what will likely turn out to have been the most intense financial mania of our lifetimes, this highly readable book will open your eyes.
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4.0 out of 5 stars Our Character, not the Stars...., Feb. 27 2004
By 
dennis wentraub (schenectady, new york USA) - See all my reviews
(REAL NAME)   
This review is from: Origins Of The Crash (Hardcover)
Reviewing Roger Lowenstein's highly readable account I am reminded of a Fortune magazine editor's throwaway comment - After the bubble people go to jail. For Lowenstein the ultimate cause of the stock market bubble was an abused interpretation of "shareholder value" that became a mantra for CEO's, accountants, stock analysts, lawyers, bankers, and finally investors. More than an historical footnote, Lowenstein has given us a moral indictment of the culture that produced this costly lesson in excess.
The notion of shareholder value and its devolving emphasis in the 1990's on share price rather than underlying business values proved devastating. "Virtually every transgression [of the period] flowed from this simple corruption." The "misplaced incentive" of lavishly awarded stock options bent the focus of CEO's and senior management to short-term stock price moves. Widespread use of stock options sprang from an academic idea to align the interests of management with shareholders and stimulate American corporate culture. Focusing on short-term quarterly benchmarks simply raised the importance of the stock price at that moment in time to the detriment of the harder job...building the business for the long run. For Lowenstein stock options are the crack cocaine of boardroom culture, the bitten apple of the period's "original sin". It is this perspective that gives coherence and insight to many of the particulars of the period still fresh in our minds. While there are clearly individual villains in Lowenstein's account, he makes the case for a pervasive ethical breakdown and a culture out of touch with its better standards.
Absent to a large degree from this account of the Crash are the dynamics of supply and demand. In the 1990's markets encouraged misallocations in the area of technology and telecommunications. It is easy to forget the urgency behind huge IT capital outlays to update computer systems prior to the stroke of 2000. Serious people considered if lights would go out, ATM's fail. Would there be hoarding of goods and cash? Would there be a recession? Would computers lock-up? Excess capacity and an over-stimulated economy were also major contributions to the bubble, but they get little attention here. This is not Lowenstein's contribution to the discussion. He sees the excesses not as a one-off, inventory event or another turn of the business cycle. His view is less academic, less antiseptic. And it is also a more unsettling view as it is rooted in character and culture.
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5.0 out of 5 stars Going Strong, Feb. 21 2004
This review is from: Origins Of The Crash (Hardcover)
Lowenstein is going strong and has actually written meaningfully about the events of 1998-2000. He explains them as an inevitable result of several factors of the 70s-90s. As well written as Buffet.
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Origins of the Crash: The Great Bubble and Its Undoing
Origins of the Crash: The Great Bubble and Its Undoing by Roger Lowenstein (Paperback - Dec 28 2004)
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