Lowenstein's title may convey the impression that his book is mainly about stock prices. It isn't: it's about the epidemic of corruption that spread through corporate America in the 1990's, though that epidemic was in part both an effect and a cause of the bull market. A better title might have been ''Executives Gone Wild.'' As Lowenstein, also the author of Buffett and When Genius Failed, explains, not that long ago the orthodoxy at business schools -- one that corporate management found highly persuasive -- was that the trouble with American executives was that they didn't make enough money. Or, to be more precise, the problem was that they didn't stand to gain enough if their companies did well. The most famous of the business-school theorists, Harvard's Michael Jensen, wrote in 1990 that ''corporate America pays its most important leaders like bureaucrats. Is it any wonder, then, that so many C.E.O.'s act like bureaucrats?''
This book has the power to keep readers burning the Itty Bitty book light until the wee hours...
...Mr. Lowenstein is at the top of his game.
Well-known financial journalist Lowenstein (Buffett; When Genius Failed) sets out to explain the stock market crash of 2000 and the ensuing corporate scandals. The ingredients are familiar: executive overcompensation and stock options, irrationally exuberant shareholders, friendly auditors, short-term focus by financial professionals and overemphasis on shareholder value. The author puts his unique stamp on these factors by juxtaposing them so brilliantly that the 20-year history that inflated the bubble seems not just understandable, but inevitable. The story is traced from the doldrums of the 1970s through the raiders and junk bonds of the 1980s to the financial brave new world of the 1990s. In self-conscious parallel to John Kenneth Galbraith's The Great Crash, Lowenstein explains that it is the boom that needs to be explained; the crash is simply the natural consequence. Lowenstein's low-key ease with the most complex financial reporting makes this book both accurate and easy to read, just as his earlier Buffett revealed a fascinating character where other writers saw only dullness, and his Where Genius Failed was a very comprehensible account of the 1998 Long-Term Capital Management blowup. (Jan.) Forecast: The author has two bestsellers to his credit on topics of much narrower interest. Unless the stock market jumps 20% before publication, this could be the top financial book of 2004. Copyright 2003 Reed Business Information.
Lowenstein, a well-known author and financial columnist, has crafted a lively and readable account of the last 30 years on Wall Street. Starting with the creation of 401(k) accounts, proceeding through the boom years of the 1990s, and then moving to the downfall of Enron and its brethren, he ties in the various factors that have inexorably led us to where we are today. While none of this is new information, Lowenstein includes enough personal details to make it seem fresh and interesting. The last chapters are particularly relevant, covering the fallout when the various deals and compensation scandals came to light. The effect of 9/11 on the government and the country in general is also touched on, particularly with regard to the rising budget deficit. Finally, an epilog discusses the fines and reforms (including the Sarbanes-Oxley Act of 2002) that resulted from the various debacles and opinions about what else must be done. The book is heavily documented throughout with quotes and sources, making it authoritative as well as informative. Recommended for public libraries.-Susan Hurst, Miami Univ. of Ohio, Oxford Copyright 2003 Reed Business Information.
A wide-ranging examination of the stock-market boom of the 1990s and its resounding crash. Ken Lay, Jack Welch, Steve Case, and their ilk may have been the guys who burst the great bubble. But, writes former Wall Street Journal reporter and current Smart Money columnist Lowenstein, "It was not merely that many companies, or many Wall Street operators, misbehaved; it was that the very culture encouraged the misbehavior and was, in large measure, its accomplice." Whereas Americans had fled the market in droves in the stagflationary '70s (by 1979, Lowenstein notes, most of the money held in pension funds was in "bonds, bills, and cash, which was practically like stuffing it under a mattress") and had only reluctantly come back in the '80s, by the end of the first Bush administration they would embrace the stock market wholeheartedly, so much so as to be ruled by it. With that change of attitudes and allocations and the concomitant demand that the market make everyone rich, as bullish '90s boomers promised, the whole world of finance changed: auditors, analysts, and accountants came under extraordinary demands to fudge the books, and the ever-evolving procedures of federal watchdog agencies seemed calculated to encourage them to do so. Cries for reform were sounded throughout the period, Lowenstein notes, but efforts to square the books were quashed by the likes of Sen. Joseph Lieberman, "a big recipient of Wall Street and accounting industry contributions" who is now talking a good game about cleaning house. Meanwhile, CEO salaries swelled, companies that "were worthless from start to finish came to be valued in the billions of dollars," and honest financial reports became objects ofexquisite rarity-all aspects of madness-of-crowds behavior that Alan Greenspan's phrase "irrational exuberance" only begins to cover, but that Lowenstein describes in pointed detail. Are there any lessons to be drawn? Yes, many. But as long as the culture "tolerates lying, even in seemingly marginal ways," Lowenstein suggests, the great humbling of 2002 may foretoken worse to come. Author tour. Agent: Melanie Jackson