01/08/2026
The Economic Club of New York luncheon with Robert Steel, in conversarion with Andrew Ross Sorkin, columnist, TV personality, co-creator of “Billions,” and author of “Too Big to Fail” and his newest “1929.” Amazing. Some takeaways!
▪️Origin of his newest book: After his book "Too Big to Fail," people kept asking him how 2008 compared to 1929. He had no idea, so he started researching. He couldn't find anything with the kind of insight he wanted, so he started creating it--an "in the room" look at what happened from the perspective of the decision-making-leaders involved. His research took 8 years, and included poring through things like secretarial notes from Oval Office meetings (between President Hoover and the head of J.P. Morgan, Thomas Lamont, whose secretary took notes (which are held in a library at Harvard)) and the NEVER BEFORE RELEASED board minutes of Federal Reserve meetings (which Sorkin went through a LOT to obtain, for more than a year).
▪️Causes of the 1929 Crash: The "dry tinder" of the crisis was leverage. “Normal people” could walk into a brokerage house and put down $1 to invest $10. It was also a technology issue. When the market began its descent, the tech of the time could not keep up. In some cases stock tickers were behind by 7 hours. Not knowing what was happening, people started selling shares indiscriminitely.
▪️Politics: Similar to today, it was suprisingly difficult to get a sense of the economic realities of the time. Looking at polling data, by the time President Roosevelt defeated Hoover, most people thought the economy was improving (in reality, it still had a long way to go)! Different than most narratives would suggest, polling data indicates voters chose Roosevelt because they hated Prohibition and blamed Hoover for it!
▪️Lessons: We've learned that when faced with massive financial crisis you need to print and spend money. What we don’t know is if there is an invisible red line after which the bond market says this is too much debt. We’re in uncharted waters in terms of how much debt is "too much," and when we might risk becoming "uncredible" as an issuer of debt. The bond market is the ultimate decider. He gave "Liberation Day" as an example. When the bond market reacted poorly to the specifics of President Trump's initial tariff plans (yields spiked), he began paring some aspects of his plan back until things normalized.
▪️On where we stand today, how close we are now to crisis: He seemed to be careful here, purposefully measured. He contrasted his role as journalist to that of investors. “As a journalist, our job is to be the professional skeptic … most investors are professional optimists.” “There is a bit of a yellow light on … we are in a bubble … there’s likely some kind of correction coming in maybe in 2-3 years…. Does meaningful correction become systemic because there is too much debt in the system? We don’t know.”
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