Andrew Ross Sorkin: evaluation

Transcript context

…There’s no doubt particular people were too levered, say, in the ’20s, but the US economy as a whole, it seems, was less levered then than it was in most of the post-war era. I’ve looked for different estimates of total debt as a percentage of GDP. I’m not sure any of these are reliable, but I came up with something like 165 percent — government, private, corporate, everything — which is higher than average for that time but not crazy high. But again, certainly particular people made big mistakes, as is true all the time. No question. Look, I think today, you look at the amount of debt that consumers have taken on, that the government has taken on — it’s just wild on a relative basis to what was happening in 1929, but I think that some of that individual basis drove so much of what was happening in the economy and the Roaring Twenties ethos that it really became almost a generational shock for those ordinary Americans who had played the stock market for the first time and lost. By the way, this is one anecdote. It’s not in the book, but it’s a personal one. My grandfather happened to be a messenger boy down there in October of 1929, as it happens, with his brother who was 16 years old. They watched people. Literally, they watched a person — they used to tell us the story — jump out of a window. I believe this is late October, early November of ’29. My grandfather lived 91 years and never bought a share of stock his entire life because of that. Now, you could say that that’s just one story and that all these are individual stories. I think there were a lot of people who were so scarred by that period of time that it actually did change the trajectory to some degree of even how investments were made, at least for some period of time at that point. Why do you think public utility shares played such a big role in both the run-up and the crash? Is that a sign that it had to do with interest rates, or it means something else?…

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