Charles Stein writes in Sunday’s Boston Globe about how he’s come to realize that we aren’t all to blame for the stock market bubble.
I’ve come around to the view that some people deserve a lot more of the blame than others. I’m not referring to the criminals who set out to break the law. I’m referring to the American financial establishment, especially Wall Street.
He goes on to highlight a new book by D. Quinn Mills.
”We had a manipulated stock market,” said D. Quinn Mills. Mills is not a bomb thrower or a disillusioned first-time investor. He is a professor at Harvard Business School. He is also the author of a new book called, “Buy, Lie and Sell High: How Investors Lost Out on Enron and The Internet Bubble“.
In his book, Mills takes aim at a whole range of financial actors, everyone from investment bankers to accountants to venture capitalists. ”In the modern world, a financial bubble is made by professional players who take advantage of public excitement to realize profit opportunities,” Mills writes.
He shows clearly that everyone along the chain threw traditional standards out the window: The venture firms pushed technology start-ups to get big fast; the investment banks took companies public that had no earnings and miniscule sales; the accountants accepted dubious transactions as revenue. By breaking their own rules, says Mills, the financiers were lining their pockets at the expense of unsuspecting investors. In short, the game was rigged.
As Gomer would say: surprise, surprise… In the late 1990’s we had our own version of the gold rush of 1849. Those selling pans to the miners got very rich while most miners suffered.