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| Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics (Agora Series) | 
 enlarge | Authors: William Bonner, Lila Rajiva
Publisher: Wiley
Category: Book
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Avg. Customer Rating:  83 reviews
Sales Rank: 6398
Media: Hardcover
Number Of Items: 1
Pages: 432
Shipping Weight (lbs): 1.4
Dimensions (in): 9.1 x 6.2 x 1.5
ISBN: 0470112328
Dewey Decimal Number: 658.473
EAN: 9780470112328
ASIN: 0470112328
Publication Date: August 31, 2007
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Condition: BRAND NEW
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Product Description
Why Going Against the Grain Pays. Bestselling author Bill Bonner has long been a maverick observer of the financial and political world, sharpening his sardonic wit, in particular, on the vagaries of the investing public. Market booms and busts, tulip manias and dotcom bubbles, venture capitalists and vulture funds, he lets you know, are best explained not by dry statistics and obscure theories but by the metaphors and analogies of literature. Now, in Mobs, Messiahs, and Markets, Bonner and freelance journalist Lila Rajiva use literary economics to offer broader insights into mass behavior and its devastating effects on society. Why is it, they ask, that perfectly sane and responsible individuals can get together, and by some bizarre alchemy turn into an irrational mob? What makes them trust charlatans and demagogues who manipulate their worst instincts? Why do they abandon good sense, good behavior and good taste when an empty slogan is waved in front of them. Why is the road to hell paved with so many sterling intentions? Why is there a fool on every corner and a knave in every public office? In attempting an answer, the authors weave a light-hearted journey through history, politics and finance to show group think at work in an improbable array of instances, from medieval crusades to the architectural follies of hedge-fund managers. Their journey takes them ultimately to the desk of the chairman of the Federal Reserve Bank and to a cautionary tale of the current bubble economy. They warn that the gush of credit let loose by Alan Greenspan and multiplied by the sophisticated number games of Wall Street whizzes is fraught with perils for the unwary. Boom without end, pronounces The Street. But Bonner and Rajiva are more cynical. When the higher math and the greater greed come together, watch out below! Mobs, Messiahs, and Markets ends by giving concrete advice on how readers can avoid what the authors call the public spectacle of modern finance, and become, instead, private investors - knowing their own mind and following their own intuitions. The authors have no gimmicks to offer here - but instead give a better understanding of the dynamics of market behavior, allowing prudent investors to protect themselves from the fads and follies of the investment markets.
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Strips the Veneer and Exposes Reality October 7, 2007
122 out of 149 found this review helpful
Mobs, Messiahs, and Markets provides insights that run counter to the propaganda spewed by the mainstream media. Thought-provoking and myth-challenging, it will delight those who value liberty. People who believe the government is "here to help you" or that the tooth fairy really does leave coins under your pillow won't like Mobs, Messiahs, and Markets. That's their problem.
Mobs, Messiahs, and Markets looks at how and why people do stupid things en masse. Understanding how mass manipulation works can help you avoid trotting off the cliff in a herd of lemmings, so this stuff is good to know. One of the tools of mass manipulation is the really big lie. Quite adroitly, Mobs, Messiahs, and Markets looks at specific lies and gives them a sound thrashing.
An example of a really big lie
Let's look at example of one such lie: Alan Greenspan did a great job as Chairman of the Federal Reserve. Anyone who has paid the slightest bit of attention to the economic data knows that's false. But prior to reading Mobs, Messiahs, and Markets, I thought he was just incompetent. The truth is far worse. The truth is that Alan Greenspan's collusion with the Clintons amounted to a theft of half our assets and half our income. He accomplished this theft by undermining our currency so much that the dollar lost half its value during his "reign of reverse gain."
Look around. Now, imagine someone barges into your home and burns half of everything you own--including half your home. While the flames are still roaring, they access your investments, retirement accounts, and any other liquid or not so liquid assets of yours and take half of those, as well. Just as the fire trucks roll up, your boss calls and tells you that from now on your wages will be 50% less--after taxes. How happy would you be about now? I have just described exactly what Greenspan did to middle class Americans and the poor.
Doesn't this make you wonder why he isn't in prison? If you steal only $1,000 and use the money to feed your kids, that's grand larceny. You go to jail, and the newspapers call you a felon. But if you steal trillions of dollars (not just billions) to abet the shenanigans of a few unscrupulous people who have wheedled their way into political office, you get an excellent pension and the newspapers call you The Maestro. Go figure. By the way, the threshold for grand larceny was $500 before Greenspan took over.
Witty
I personally don't enjoy the witty ripostes that permeate Mobs, Messiahs, and Markets, but the barbs are creative and many people will be amused. To me, the reality is farcical enough already.
What makes Mobs, Messiahs, and Markets valuable to me is how the authors use facts and logic to debunk frauds and delusions in a definitive manner. Mobs, Messiahs, and Markets should be required reading for anyone wishing to participate as a citizen. I also highly recommend it for anyone who has bills to pay.
Gold and central banking
As I read Mobs, Messiahs, and Markets, I kept nodding in approval. Yes, these folks have done their research. Then, I got to the last chapter and things suddenly changed. The last chapter promotes the tired old "gold as a defense" notion. Accepting that particular notion as reasonable requires suspending several laws of economics, commerce, and finance. And it requires ignoring a large body of long-established basic facts. While the rest of the book was insightful, this chapter bombed in the "fundamental understanding" department. If you are stuck on the gold notion, of course, you can cherry pick what you want to "prove" you are right.
Now that I've fired a shot at an otherwise excellent book, here's my explanation. A currency, to facilitate trade, cannot be fixed to a commodity. A currency must be flexible, because markets are always in flux. Fix our currency to gold, and our markets will misfire. Markets are complex interactions among multiple parties simultaneously, rather than one-for-one trades of my pig and your cow.
The "gold mentality" assumes a physical production model and the trading of physical objects whose value is clearly known among parties who know each other. But those assumptions don't fit our actual markets, which is why everyone went off the gold standard. The reality is that most of trade is for non-physical assets (an example being intellectual property), and that alone tells you a great deal if you think about it.
This is a book review and not a white paper, so I won't go into detail on the other problems with this model. But let's look at this one a bit closer. As you look at the variety of products that people pay for, you can see a specific order in which value is added and by which profits are made. At the bottom are raw materials, in the middle somewhere you have manufactured goods. The highest level of value, and thus of economic gain, is intellectual rather than physical. That's why, for example, jobs that use your brain pay far more than jobs that use your back. It's why, for example, an engineering firm like Black and Veatch always has job openings and why, for example, widget factories in China are laying people off. It's why, for example, Bill Gates is the richest man in the world, but not a single factory machine operator is even on the list of the top 100 million richest people. Do we really need to "debate" this?
So, why do the authors go down this path? The "gold solution" is a proposed cure for the debasement of our currency. That debasement comes in the form of inflation caused by our central bank, which can create money from thin air because we have a fiat money supply (the money has no intrinsic value). The authors compare central banking to central planning of manufacturing and agriculture (Soviet style), but that's a false comparison because a central bank isn't making anything. At least, it's not supposed to and therein lies the problem with our central bank.
The mission of a central bank should be to ensure the currency remains stable. To do that, it needs to expand and contract the money supply to maintain the value of the currency. Central bankers in the USA believe their mission is to serve politicians, not to be guardians of the currency. And that's the problem. The book gives an excellent explanation of how this political serving is done and the huge damage it does to individuals and the nation as a whole. But instead of connecting the dots at the end, the authors jump into an alternate universe.
Creating money out of thin air can't be helped. The Federal Reserve isn't the only entity that creates money. We all do it, all the time. When a business extends trade credit, guess what? It creates money. Ditto when you write a check, use a credit card, write an IOU, take out a loan, or buy tickets to the show. All of these activities contribute to our money supply, even if only in a transitory way. They are fluid, which is why they work. You could not tie them to a gold standard, even if you wanted to.
Tying a currency to any commodity is exactly the kind of central planning that the authors rail against. Instead of letting the market decide the value of the currency (with a central bank to guard against inflation), some central authority pegs it to an industrial metal (which doesn't guard against inflation, as history proves). Then the supply of that metal fluctuates to one rhythm while the general market fluctuates to another. This creates many wealth-inhibiting problems, which is why we don't do it anymore. If you want commerce (as we know it) to grind to a halt, put us on the gold standard. Watch the bread lines form, shortly thereafter.
Another tired and irrelevant cliche the authors use is "printing money." The printing of dollars (Federal Reserve Notes) contributes a statistically insignificant amount to the total money supply. If the FR decided to triple the number of FRNs printed over the next six months, I doubt we'd notice any difference in our economy. People and businesses rely primarily on electronic money, not paper notes, today. Look at your own finances as an example, and you'll see how little you actually use paper notes. Does anyone pay a mortgage with paper notes these days? Make a list....
When we create money out of thin air, the Federal Reserve should contract the money supply to keep the currency stable. What happens instead is the FR also creates money out of thin air--doing the exact opposite of what it is morally compelled to do.
Thus, the behavior of the Federal Reserve is like that of someone who throws a drowning man an anchor. Greenspan, instead of throwing us life preservers, tossed so many anchors at us that our currency lost half its value. Nice guy, huh? Buying gold won't stop that, and it won't protect you from that. The only peaceful means of getting that kind of theft stopped is to vote the bums out of office. Voting for anyone other than a Democrat or Republican would help, but if you vote only for candidates who speak of the problems this book exposes (yes, they are out there, and Ron Paul is one of them), you will be doing the most good.
The rest of the book
Now that I've addressed (at length) the part of the book that should be revised (the misinformation about gold), I have to say the rest of the book is spot on. It is no exaggeration to refer to our public policies as spectacles. Or worse. The way the authors address these spectacles is great, and they provide a badly-needed counterbalance to the lies and lunacy that people are inundated with.
The book has a fairly high page count, but it's a quick read. It's divided into six Parts.
Part One is titled "A Critique of Impure Reason" and contains three chapters. This presents a theme the book revisits throughout, and that is of the person who is determined to make the world a "better" place by making it conform to his/her delusions. Hitler was such a person--you can guess how this goes. The book takes shots at several incompetent and/or downright crazy people who have led one nation or another into an expensive debacle or even complete ruin. Some of the blunders were monumentally stupid. And as we see, monumental stupidity is a recurring theme in government.
The first chapter of Part Two talks about the witch hunts that we look back on as examples of hysteria today as in, "we would never do that." Don't be so sure. The second chapter talks about how the media inflame war rhetoric and create news rather than report it. That's one reason I don't read newspapers. I don't watch television, either, because I have a machine to wash my clothes and another to wash my dishes--I don't need one to wash my brain.
Part Three talks about the futility of war. I like the example of how France loses wars yet still is sovereign France. Winning or losing doesn't seem to matter. Germany lost two world wars, but what language do Germans speak today? Hint: Sie sprechen Deutsch?
Was any war ever worth its high cost? The authors ask why there was an American revolution. The people of India, Australia, and New Zealand were able to obtain their independence from the British Empire without firing a shot. If that doesn't make you pause....
A particularly enjoyable area in The Flattening the Globe (title of Part Four), is where the authors take on Thomas L. Friedman. This is the guy who wrote the whacked out "The Lexus and the Olive Tree" and actually got it published as nonfiction. Having read relatively smarter material on bathroom walls, I never made it past the first 20% or so of the book. I wonder to this day whether Friedman had suffered from repeated blows to the skull, or deliberately wrote that ode to stupidity as a practical joke. Bonner and Rajiva wrote counterarguments to Friedman's absurd assertions, to illustrate some interesting points. The explanations were quite entertaining, and in themselves justify buying the book.
To understand what a Bubble King is, read Part Five. Here's where we get a good expose on the lunacy of price runups, speculation posing as investing, national fiscal policy (such that it is), and other "suckers apply here" scams that snag millions of people who eagerly line up to be fleeced. The real kicker is Chapter 15, "The Mother of the Mother of All Bubbles." Here, we get an analysis of the most important financial topic relevant to today. Understanding it will prevent you from becoming just another donor to the ultra-wealthy. That's probably why you don't get to read about it in the mainstream media. Guess who owns the mainstream media?
The last chapter lurches suddenly into lala-land, as noted earlier. That's where the book is supposed to tell you how to survive the public spectacle in politics and finance, but doesn't. However, there's still the rest of the book to enjoy and learn from. The authors poke right through the veneer of deception that seems to cover most everything that's financial or political these days. And just being able to see the reality will help you avoid following a herd of lemmings over a cliff.
Reviewer's view on elections
One reason we get things like Alan Greenspan's massive theft is we don't have an elected government in this country. Hold on, now, and let me explain. We can look back on the "elections" of the past half century and see that no matter which side of the Demopublican Party is "elected," we still get insane levels of federal spending. And they fund that irresponsible behavior through a combination of currency devaluation (what Greenspan did to us), stealing from children not yet born, and levying a hidden national sales tax by jacking up the cost of capital through staggering levels of debt accumulation.
How do they get away with this? Through a clever combination of disinformation, red herrings, and blatant lies. They also use a clever "good cop, bad cop" routine to pretend before the voters that the "election" is a choice between the Democrats and the Republicans. Or, more accurately, it's a "good crook, bad crook" routine--about like choosing between the Crips and the Bloods. The outcome is as pre-arranged and orchestrated as an All Star Wrestling match.
The common wisdom (or lack thereof) is that unless you vote for Democrat or Republican, your vote doesn't count. This defies logic, because voting either way means you simply rubber stamp a decision made by some Demopublicans behind closed doors. In other words, you throw away your vote out of fear it might not count unless you do.
Meanwhile, the currency devaluation helps these thieves keep right on fooling most of the people all of the time. Read Mobs, Messiahs, and Markets. Then, decide if you still want to give these criminals your personal seal of approval at the polls.
Mobs, Messiahs, and Markets isn't about elections, but the information in it should help you decide what to do at election time. It should also help you decide what to do about choices in investing, asset protection, and other aspects of financial management. Just don't go out and buy gold out of fear the world is ending--whether you have it or not won't make any real difference, and there are far better strategies available.
 On "follow the crowd" syndrome! August 31, 2007
70 out of 81 found this review helpful
Ever since Malcolm Gladwell wrote the "Tipping Point", group thinking and social epidemic has been a topic of interest , not only among the academics , but also among investors and entrepreneurs. The success of social networking websites and wikipedia are all can be traced all the way down to the so called "follow the crowd" syndrome.
But William Bonner and Lila Rajiva have come up the with a brilliant idea to explore the flip side of social epidemic and the ripple effects it has on those who simply follow the crowd.
Investors wanted to follow the stocks "Warren Buffett" was buying. Guess what? It was too late. Home buyers wanted to buy houses with a crowd. Guess what? Most of them were late in the game and over-paid. Every college undergrad thought an IT degree would be the best. Guess what? There were too many programmers, and not many civil engineers and nurses. A large group of investors thought every brick-and-mortar business could be replaced with a dot.com. Guess what? Companies like WebVan.com were able to convince venture capitalists that vegetables can be sold online!! Banks jumped on the sub-prime mortgage bandwagon. Guess what???
"Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics" is a welcome addition to this ever interesting topic of "follow the crowd" syndrome. What makes this book click is the witty presentation and the practical approach of the authors. Bonner and Rajiva have done a fantastic job of presenting the nuances of "public spectacle' in a manner that is light-hearted as well as thought provoking. They have done a truly amazing job of striking at the center of conventional wisdom to explain why swimming against the current pays rather than following the crowd.
Their best advice: "When the higher math and the greater greed come together, watch out below!"
Go read this book. It's funny, brilliant, thought provoking and often offensive, too!!
N.Sivakumar
Author of:
America Misunderstood: What a Second Bush Victory Meant to the Rest of the World
One part Economics, one part Politics, three parts Ego September 3, 2007
41 out of 45 found this review helpful
At first glance, this book appears to be the antithesis of a favorite of mine, The Wisdom of Crowds by James Surowiecki-- the authors Bonner and Rajiva criticize the efficacy of mob rule and the intelligence of the group. Further in the read, however, it is clear that "Mobs" is not the antithesis of "Crowds", and actually agrees with one of the central principles of Surowieckis book, but has just a fraction of the scope, despite the great read that it is.
After bashing group-think, as a true Socratic would, in a methodical and convincing manner, the authors turn their focus on another popular American pastime of late--Bush bashing, then go on to describe the impending collapse of the entire world economy. It's evident that mobs are irrational and tend to do some regretful things (like killing a famous Athenian philosopher) and Bonner and Rajiva have no quarrel here, but to say that the negatives of group-think refutes "The Wisdom of the Crowds" is like saying Socrates wasn't wise because he asked more questions than gave answers. As Surowiecki explains, crowds are only more intelligent than their constituent parts if they are made up of independent thinkers, not mobs. Bonner and Rajiva would surely agree to that and do to an extent in their book.
After a bit of Bush bashing and anti-Iraq-war sentiment, the authors deflate the Che Guevera revolution succinctly. But George and Che are the minions of a larger-picture chess match, in which there is a larger antagonist--Alan Greenspan. The authors make the case against Greenspan's lowering of interest rates to try to stave off a recession as the creation of the "Mother of the Mother of All Bubbles". Among persistent insinuations of associations between Greenspan and Enron, charts revealing the current financial situation, and a great history of the last twenty years of world economics, Bonner and Rajiva make the case that the world economy is an enormous bubble about to burst. Unfortunately, they don't show how to capitalize on the current economic system.
"Mobs" is an entertaining read but the constant ridiculing can get fairly uncomfortable (the authors calls Friedman's The World Is Flat "suitable only for children...to sit on or club each other over the head with"). Though "Mobs" usually follows a harsh critique with great points, the authors should hope their critics aren't nearly as unjust as they.
It is an insightful, intriguing, and entertaining book, despite the flaws. Without the motif of antagonism, it would be a great book. As it is, however, "Mobs" is a great complement to the above mentioned books, but one would suffer if this was the only book he read.
 Ugh! September 3, 2007
30 out of 93 found this review helpful
Once again, Bill Bonner states the obvious in a manner that suggests he's smart and you're not.
Drek!
P.S. This book was published on Aug. 31, the very same date Sivakumar Nadarajah published his glowing review. Now that's some fast delivery.
Very Interesting, Very Important, and Very Readable October 16, 2007
19 out of 20 found this review helpful
"Mobs, Messiahs, and Markets" by William Bonner and Lila Rajiva is a fascinating work which considers how people think and behave, privately and collectively, and the effects these different modes have within the public sphere. I haven't quite decided which specific literary genre this book falls into; maybe that is inconsequential anyway. There's a lot of history, much economics and politics and, well, almost every other recognized social science comes into play. The main theme, however, seems to be well illustrated in the subtitle of the book: "Surviving the Public Spectacle in Finance and Politics." This is not, therefore, merely an academic inquiry into group dynamics, but a very practical one as well.
In the interest of full disclosure, I have received Bill Bonner's "Daily Reckoning" financial newsletter via e-mail for a number of years, so I am somewhat familiar with his writing style and his viewpoint regarding matters economic and political. This is the first time, however, that I have read a book which he has authored or co-authored. Fortunately for the casual reader, this book is not the least bit "dry" or dull, as all too many books dealing with this or similar topics seem to be. In fact, there are many times in this work where the authors relate or allude to something that is downright hilarious. Be that as it may, this is a serious look at an important phenomenon in the human condition.
Mob psychology is one of the most interesting topics to study and reflect upon. Even a brief inquiry into the dynamics of crowd behavior raises all sorts of interesting questions. And then there is the notion of so-called "groupthink," a term used by Bonner and Rajiva in their book. I particularly liked their colorful way of describing that notion. Referring to it as the "shifting bog of groupthink," it is "not only completely different from private thinking but is an illusion, piled on top of a fraud, stacked on a foundation of humbug, built in the mud of misconception with the building blocks of lunacy." Couldn't have said it better myself! As for me, someone who is just as fearful of a "mobocracy" as of an "autocracy, that description is more than satisfying.
Many insights into crowd psychology are provided during this journey into human thinking and behavior and the historical range of illustrative topics is broad and sweeping. Why do so many otherwise intelligent people jettison their common sense and rational thinking in order to just "follow the crowd"? Why do so-called "do-gooders" go so bad? Why do "witch hunts" occur so often, even in sophisticated and intellectually advanced societies? How do Hitlers and Stalins come to captivate the attention of and accumulate power over otherwise intelligent and rational human beings? How does "groupthink" affect those involved in the financial markets, such as investors and advisors? Moreover, how can one avoid getting caught up in the frenzy of mob psychology, whether in economics or politics or anywhere else?
This book is both an interesting historical adventure and a very practical primer, especially for those involved in the financial markets. As it says inside the dust-cover: "The authors' cautionary tale of the current bubble economy warns that the gush of credit let loose by Alan Greenspan is fraught with perils for the unwary -- but their thoughtful and always entertaining approach also offers some sound investing principles for avoiding the pitfalls of the public spectacle, thinking for yourself, and protecting your money, your sanity, and your soul." Who could ask for more than that?
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