A College Freshman History Text on the Stock Market Crash of 1987.

American: A Narrative History | 2004 | George Brown Tindall and David Shi

[mcvey]

A seeming epidemic of greed and self-absorbed materialism had spread through the country. Wall Street witnessed a rash of arrests and convictions . . . .

And more government officials, including Attorney General Edwin Meese, became entangled in the web of corruption. Commentators talked of a compulsive materialism energizing the . . . professionals dubbed “Yuppies.” Caught up in the race for money, goods, and status, these baby boomers in the fast lane captured the tone and mood of affluent life in the 1980s.

Then on October 19, 1987, the bill collector suddenly arrived at the nation’s doorstep.”

--snip—

“The Dow Jones industrial average plummeted . . . an astounding 22.6 percent.”

--snip—

What caused such a goring of the bull market?

--snip—

But most [analysts] agreed that the . . . problem was the nation’s spiraling indebtedness and chronically high trade deficits. Americans were consuming more than they were producing, importing the difference, and paying for with borrowed money . . . Foreign investors had lost confidence in Reaganomics and were no longer willing to finance America’s spending binge.

--snip—

For the first time, [Reagan] indicated that he was willing to include increased taxes in such a package. Yet the eventual compromise plan was so modest that it did little to restore investor confidence. As one Republican senator lamented: “There is a total lack of courage among those of us in the Congress to do what we all know has to be done.”

George Brown Tindall and David Shi, American A Narrative History (New York: W. W. Norton & Company, 2004) Brief Sixth Ed., pp. 1188-1189.

[eleni121]

Oh I see. A case of academic "freedom" to use only leftist texts.

So what's wrong with Johnson: eminent historian. Get everyone to agree. Tell them he's a Euro leftie.

[mcvey]

Yes, wagglebee, I had forgotten all about that spending spree. This is a subject I cover once a year and that had slipped my mind.

Thank you . . . great piece of data.

[DancesWithBolsheviks]

Point out how insignificant the little blip around 1987 is.

[ChadGore]

Check the DOW history of that week.

If my memory serves, the DOW recovered 100% of that "crash" the very next day.

[mcvey]

I once used the chapters out of Paul Johnson's Modern Times and was told by a junior colleague that he and his students only use that books so that they can become angry over his distortions. (I am not making this up!)

[KellyAdmirer]

But most [analysts] agreed that the . . . problem was the nation’s spiraling indebtedness and chronically high trade deficits. Americans were consuming more than they were producing, importing the difference, and paying for with borrowed money . . . Foreign investors had lost confidence in Reaganomics and were no longer willing to finance America’s spending binge.

Hey dude, you could say the exact same thing about today. Or 1996. Or 1976. Or 1966. We are more in debt, have way bigger chronic trade deficits, are paying with more borrowed money, and are consuming way more now than in the 1980s. And besides, the stock market "crash" (really just a market correction, albeit a steep one, "crash" is a complete misnomer created by the press) had nothing at all to do with foreigners not wanting to finance our "spending binge." Foreigners were and are completely willing to buy our bonds. Stocks had just become temporarily over-valued, and had recovered all their losses within a couple of years. It was an EXCEPTIONALLY good time to buy stocks.

So, this doesn't explain anything, except by putting the nebulous label "Reaganomics" on it and expecting rows of gullible college students to go, "Yeah, the evil Reaganomics."

Throw that book out and look for something that isn't just a polemic.

[My2Cents]

Probably teaching at a publicly-funded college, where ignorance of Republican policies is a prerequisite for employment.

[ark_girl]

Depressingly, he or she can be in his late 20's or early 30's. I was born in '77 (so, I was only 10 when all of that was going on) and have friends I graduated with who are MD's. How much longer does it take to get a PhD. I could easily have a masters by now.

[cinives]

Excellent recommendation. My high school kid read it (calling it her "nosebleed" book) but she did finish it and learned a tremendous amount of factual history from it.

Try "Modern Times" by Johnson as well.

[VeniVidiVici]

And more government officials, including Attorney General Edwin Meese, became entangled in the web of corruption

Someone correct me if I'm wrong but wasn't Meese's "corruption" accepting a gold watch from the Japanese?

As an aside, I'm taking a micro-economics class this fall. God help me.

[weegee]

Thanks.

[mcvey]

No, ark_girl . . . it is he and I had my first master's before you were born.

[wagglebee]

Do you actually have to use the textbook. I remember classes in college where the professor told us on the first day of class that we didn't even need to bother buying the textbook because he wasn't going to use it and everything came from handouts and his lectures.

[Hydroshock]

Please put me on your ping list, thanks

[Piranha]

Place marker (for later reading).

[GeronL]

A seeming epidemic of greed and self-absorbed materialism had spread through the country

well then your textbook was written by idiots.

[Al Gator]

I was a broker for Blinder Robinson when that occurred.

The main culprit was computer trading. The market took a quick dip for whatever reason, but the institutional traders had just set up their software to protect their portfolios. Software trading was still relatively new and the institutions took a chop and slash attitude toward protecting their portfolios. No one knew that these systems would behave the way they did.

The drop happened so quickly, I couldn't call my clients. All we could do was sit and look at the ADP monitor and marvel at how fast it went down.

The SEC made serious changes to the way software controls the market.

This other stuff about greedy capitalists and the such is just more fart gas from the commie pinkos.

[LS]

Sorry, but I think our book, "A Patriot's History of the United States," is even better than PJ's book.

1) We are Americans, and "get" Americanism more than he does;

2) PJ is weakest on economics. If you look closely, he has multiple, mutually-exclusive explanations for the Great Depression.

3) HofAmPeeps only goes up to something like the early 1990s. Our paperback goes up to mid-2006!!!

[wagglebee]

IIRC they bought Rockefeller Center and Pebble Beach for more than double fair market value at the time.

[mcvey]

Actually, I have used textbooks in the past where I sat there day-after-day pointing out inaccuracies and bias.

It is fun for the students and fun for me and my colleagues HATE it.

McVey