Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for the ‘The Depression’ Category

The history of finance: The man who stamped the crash

leave a comment »

How Ferdinand Pecora won the blame game

Nov 11th 2010

The Hellhound of Wall Street: How Ferdinand Pecora’s Investigation of the Great Crash Forever Changed American Finance. By Michael Perino. Penguin Press; 352 pages; $27.95. Buy from

[Greg Ip] FINANCIAL crises have many causes and multiple actors. Sometimes, though, a single, electrifying interpretation emerges to capture the public imagination and dominate the political response. It has yet to happen with the current crisis. But for the Depression it struck dramatically over a mere ten days in early 1933, just before Franklin Roosevelt took office.

In the years after the 1929 crash, Wall Street, except for a few scoundrels, had largely escaped broad condemnation, portraying itself guilty of nothing more than the same irrational exuberance that had seized ordinary investors. In his entertaining new book, “The Hellhound of Wall Street”, Michael Perino recounts how Ferdinand Pecora, the tenacious and theatrical chief counsel to the Senate Committee on Banking and Currency, altered that impression. By the time Pecora was finished, the public saw Wall Street’s finest not as bystanders but as malicious purveyors of the misfortune that had affected millions.

The original article is linked here.


Written by gregip

November 11, 2010 at 10:01 pm

Populists and bankers: Strange meeting

leave a comment »

Jan 28th 2010 | ORLANDO, FLORIDA
From The Economist print edition

The populist left meets the populist right to hammer the Fed

A star of the tiny screen

[Greg Ip] DEMOCRATS seldom come more partisan than Alan Grayson, who represents Florida’s eighth congressional district in the House of Representatives. He calls Republicans “foot-dragging, knuckle-dragging Neanderthals” and a “selfish party” whose advice to sick Americans is “Die quickly.” Yet when he dropped in on a convention of small-government libertarians in his home town of Orlando, Florida, last year, he was greeted like a rock star. He received two standing ovations and requests for his autograph.

The audience was not applauding Mr Grayson’s stand on health care or any other beloved Democratic cause, but his unrelenting attacks on the Federal Reserve. Though he has been in Congress only a year, his cross-examinations of Fed officials there are YouTube sensations. One, in which he demands to know who got more than $1 trillion in Fed emergency loans, has been viewed more than 3m times.

Mr Grayson’s antipathy towards the Fed is part of a resurgence of political populism on both the left and the right. Read the rest of this entry »

Written by gregip

January 27, 2010 at 10:00 pm

The Financial Crisis Inquiry Commission: That 1930s show

leave a comment »

Jan 7th 2010 | WASHINGTON, DC 
From The Economist print edition

A Depression-era crusade against Wall Street has a 2010 revival

Getty Images
Getty Images
Pecora in his pomp

[Greg Ip] THE battle against the financial crisis may be ending, but the war over why it happened has barely begun. The most ambitious effort yet to settle the story begins next week with the first hearing of the Financial Crisis Inquiry Commission.

Congress gave the ten-member bipartisan commission a sprawling mandate: to investigate at least 22 potential causes, from excess global savings to short-selling, and to explain why specific firms collapsed or needed bail-outs. The report, due by December 15th, is not supposed to contain recommendations but probably will.

Though modelled on the body that investigated the attacks of September 11th 2001, the spiritual father of this venture is the Pecora Commission. Read the rest of this entry »

The use & abuse of economic history

leave a comment »


80 years after the crash that ushered in the Great Depression, we’re not repeating history’s mistakes. We’re making our own.

By Greg Ip

Sunday, October 25, 2009

 Book review of:

THIS TIME IS DIFFERENT: Eight Centuries of Financial Folly,  By Carmen M. Reinhart and Kenneth S. Rogoff, Princeton Univ. 463 pp. $35

THE CREATION AND DESTRUCTION OF VALUE: The Globalization Cycle, By Harold James, arvard Univ. 325 pp. $19.95

The Dow’s recent vault back to the neighborhood of 10,000 inspired a sense of relief far more than it did any urge for celebration. We have been through a dreadful recession, but at least, the market tells us, we have avoided a depression.

Or have we? This week marks the 80th anniversary of the crash that ushered in the Great Depression. In recent months, the Dow’s behavior has eerily mimicked those dark days when the index leapt from its 1929 lows to rally 48 percent into 1930. It was a false dawn: The worst of the Depression was still to come.

A popular refrain during our modern-day financial crisis is that we have forgotten the lessons of economic history. But Americans are not ignorant of the past: Many are obsessed with it. Countless investors scrutinize stock charts and bet on history repeating itself. However, few win this way. Our problem is not ignorance of history but an inability to know which bits are most relevant to the present. Read the rest of this entry »

Written by gregip

October 26, 2009 at 4:08 pm

Response to Meltzer on Depression comparisons

leave a comment »


Unlike any since the Depression

Posted by:
The Economist l WASHINGTON
Monetary policy

[Greg Ip] IN MY many years of reporting on the Federal Reserve, I have turned more times than I can count to Allan Meltzer. Volume One of his history of the Federal Reserve (he’s still working on Volume Two) is one of the most thumbed books on my shelf, and I consider him one of the leading authorities on 20th century economic history. Naturally I was intrigued by his criticism of comparisons between the current period and the Great Depression in the Wall Street Journal.

It’s a fascinating piece but I have several qualms with it. Read the rest of this entry »

Written by gregip

September 4, 2009 at 8:16 am

Out of Keynes’s shadow

leave a comment »


Feb 12th 2009 | WASHINGTON, DC
From The Economist print edition

 The original story is linked here.


Today’s crisis has given new relevance to the ideas of another great economist of the Depression era

Sue Vago


SHORTLY after he was elected president, Barack Obama sounded a warning: “We are facing an economic crisis of historic proportions…We now risk falling into a deflationary spiral that could increase our massive debt even further.” The address evoked not just the horror of the Depression, but one of the era’s most important thinkers: Irving Fisher.

Though once America’s most famous economist, Fisher is now almost forgotten by the public. If he is remembered, it is usually for perhaps the worst stockmarket call in history. In October 1929 he declared that stocks had reached a “permanently high plateau”. Today it is John Maynard Keynes, his British contemporary, who is cited, debated and followed. Yet Fisher laid the foundation for much of modern monetary economics; Keynes called Fisher the “great-grandparent” of his own theories on how monetary forces influenced the real economy. (They first met in London in 1912 and reportedly got along well.)


As parallels to the 1930s multiply, Fisher is relevant again. Read the rest of this entry »

Written by gregip

February 12, 2009 at 10:33 pm

Lessons of the ’30s: Long Study of Great Depression Has Shaped Bernanke’s Views

leave a comment »

Fed Nominee Learned Perils Of Deflation, Gold Standard And Pricking of Bubbles — A Grandmother’s Explanation

By Greg Ip

2660 words

7 December 2005

The Wall Street Journal



(Copyright (c) 2005, Dow Jones & Company, Inc.)

In 1983, Mark Gertler asked his friend and fellow economist Ben Bernanke why he was starting his career by studying the Great Depression. “If you want to understand geology, study earthquakes,” Mr. Bernanke replied, according to Mr. Gertler. “If you want to understand economics, study the biggest calamity to hit the U.S. and world economies.”

Mr. Bernanke’s fascination with the economic earthquake never abated. “I am a Great Depression buff, the way some people are Civil War buffs,” he wrote in 2000. “The issues raised by the Depression, and its lessons, are still relevant today.”

Mr. Bernanke’s interest in the Depression, which dates back to his childhood, is a guide to the evolution of his thinking. In particular, his groundbreaking research on how mistakes by the Federal Reserve compounded the catastrophe is likely to influence how he steers the economy once he succeeds Alan Greenspan as its chairman early next year. Read the rest of this entry »

Written by gregip

December 7, 2005 at 11:15 pm