Stealing the Market: How the Giant Brokerage Firms, with Help from the Sec, Stole the Stock Market from Investors

Mayer (M) demonstrated great prescience in this 1992 book by showing that the stage had been set for the great stock market bubble of 1995-2000.One of the major ways this bubble was able to keep growing,besides the Federal Reserve System's(Alan Greenspan and the Governor of the Federal Reserve District Bank of New York)abject failure to prevent margin account loans,used to fund the purely speculative purchase of stocks, from increasing from $38 billion in 1992 to just under $280 bilion in 1999,was the complete breakdown in basic market regulatory enforcement by the Securities and Exchange Commission(SEC).One could make a good guess that Spitzer,the present attorney general of New York who has attempted to clean up much of the mess on Wall Street,had read this book carefully.All he would have to do is connect the dotted lines .Massive accounting fraud combined with the outright theft of tens of billions of dollars by various brokerage houses who were allowed to trade against their customers after hours or in secret.All of this might have been prevented if Bill Casey had been running the SEC.There are a few minor slips relating to the history of economic thought that are made on page 148.Joseph Schumpeter is sui generis.He really should not be bracketed with the Austrian economist E.Bohm-Bawerk.Likewise,Schumpeter was extremely critical of the circular flow model.This model is a static,stationary,timeless model of no or little fundamental change or change which is slow,perceptible(like a baby growing up),and easy to adapt to, given the continuous repetition of the same events throughout time.Schumpeter emphasized the impact of dynamic,unexpected changes brought on by innovations that created massive discontinuities in the existing methods of production and finance.He emphasized the creative destruction brought on by technological change and advance.