Pop!: Why Bubbles Are Great For The Economy (Hardcover)

by Daniel Gross (Author)
Key Phrases: mental infrastructure, New York, United States, Wall Street (more...)

Editorial Reviews

From Publishers Weekly
Starred Review. Three cheers for "exuberant, foolish, mad overinvestment!" Slate columnist Gross takes a counterintuitive look at economic bubbles—those once-in-a-generation crazes that everyone knows can't last, and don't. With each one, we lament having gotten in too late, and then not having gotten out soon enough, and finally shake our heads at the inevitable bankruptcies and lost jobs and general financial wreckage. The pattern is all too familiar, which is why Gross's argument is so intriguing: that these bubbles, with their hype and madness and overenthusiasm, are not to be feared—they're actually a primary engine of "America's remarkable record of economic growth and innovation." The author surveys modern bubbles and finds the benefits far more durable than the disruptions: in each case, most investors flopped, but businesses and consumers found themselves with a "usable commercial infrastructure" that they quickly put to new uses. The telegraph "led to the creation of national and international financial markets"; extra railroad lines made national consumer brands possible and gave consumers access to distant stores; extra fiber-optic capacity gave everyone Internet access after the bust. Gross drops zingers throughout his cheery history, amusingly highlighting parallels between past and current bubbles. He concludes—with admirable practicality—by calling for a "real bubble" to jump-start alternative-energy programs. (May)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

Review
"Gross’s thesis is...thought-provoking...for modern investors, particularly given that the bubble phenomenon shows no sign of disappearing." -- Financial Times

"It’s hard to resist crossing your fingers...hoping that the next bubble bursts while you’re still around to enjoy it." -- New York Observer

"The sort of analysis that makes economics and investing so intriguingly fascinating." -- Barry Ritholtz, The Big Picture

"This is a stimulating book, worth your time and money." -- Tyler Cowen, Marginal Revolution

In his new book Pop! Why Bubbles Are Great for the Economy, business journalist Daniel Gross makes the contrarian-but-persuasive case that irrational exuberance and its aftermath have made the U.S. economy a juggernaut. -- Jeff Ostrowski, Palm Beach Post

Pop!’s good old-fashioned historical narrative is refreshingly unambiguous in its lessons for investors.

-- Barron's

Sizzle! Pow! Bam! Business history gets feisty in this attention-deficit-friendly guide to American booms and busts. Gross' angle: Bubbles are good for us, or at least they're not as bad as you might think. . . fast stats and light pace make the "dismal science" seem less dismal. -- Conde Nast Portfolio

Sizzle! Pow! Bam! Business history gets feisty in this attention-deficit-friendly guide to American booms and busts. -- Conde Nast Portfolio

The sort of analysis that makes economics and investing so intriguingly fascinating. -- Barry Ritholtz, the Big Picture

This is a stimulating book, worth your time and money. -- Tyler Cowen, Marginal Revolution

See all Editorial Reviews

Product Details

• Hardcover: 240 pages
• Publisher: HarperBusiness; 1 edition (May 8, 2007)
• Language: English
• ISBN-10: 0061151548
• ISBN-13: 978-0061151545
• Product Dimensions: 8.1 x 4.8 x 0.6 inches
• Shipping Weight: 11.2 ounces (View shipping rates and policies)
• Average Customer Review: 2.4 out of 5 stars See all reviews (5 customer reviews)
• Amazon.com Sales Rank: #618,312 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

18 of 21 people found the following review helpful:

3.0 out of 5 stars Simple Thesis...Nicely Done, June 12, 2007

By	dennis wentraub (schenectady, new york USA) - See all my reviews (REAL NAME)

Taking the long view, bubbles - manic bursts of investment by entrepreneurs and investors - have had a positive impact on our economy. This is the simple idea that supports POP! a quick history of American hyper-growth. The infusion of capital, uncritical enthusiasm, and grand expectations - all to excess - leave in their abrupt aftermath an infrastructure - physical, legislative, or psychological - that those who follow ("consolidators") can use to ultimately realize the goals of the early dreamers. It is another of author Daniel Gross' contentions that the uniquely American aspect of the bubble experience has to do with the role of government. Government tax credits and grants stimulate American investment without an outright attempt to control the end results and thus diminish its longer term benefits to society.

Daniel Gross looks at the development of the telegraph, the build-out of railways, the internet boom-bust, the recent real estate boom, and the now bubbling, alternative energy phenomenon. In each earllier instance a collapse resulted in havoc and pain for the initial investors that left behind infrastructure (viz. national rail system, telecommunication network, new construction) that successors used for their profit. The 1929 stock market collapse is a classic bubble representing the pursuit of easy money (viz. credit and its wily twin, leverage). The infrastructure that resulted was not physical but legislative. Laws and regulations put in place after the Crash created an investment environment that would position the U.S. financial markets as preeminent. There is not a lot that is new in POP!, and its main idea that bubbles have had a positive effect on the economy is perhaps too fragile a foundation to support a book, but the commentary is presented selectively and with journalistic wit.

19 of 23 people found the following review helpful:

2.0 out of 5 stars A Short History of Financial Bubbles, June 15, 2007

By	Mr. William Y. Chan (San Francisco, CA) - See all my reviews (REAL NAME)

There's nothing really new in this book. The idea that bubbles are "naturally" recurring phenomena is a standard concept of economics known as the business cycle. The idea that bubbles lay down the expensive infrastructure investments that make the next boom/biz-cycle-upswing possible is also not new. An example of this is: Google's current success would not have been possible if tech companies had not built out our broadband infrastructure in the first dot-com bubble.

What's useful about this book is that it conveniently lays out several bubbles and how the overinvestment in each bubble contribute to economic rebirth. History may repeat in the chronicles of business cycles, but it's amazing and interesting each time. My recommendation is that you read this book if you find this angle interesting, but if you only want the main point, save your money as I've already given it away above.

I found the prose very distracting. I couldn't get more than a page before the author felt the need to write another glib metaphor comparing something to something else totally unrelated. It's as he feels a constant need to show you how clever he is. Read this book if you want to find out how annoying metaphors can be.

1 of 1 people found the following review helpful:

4.0 out of 5 stars "Common knowledge" so often forgotten until the next pop!, July 23, 2008

By	Larry R Frank, MBA, CFP - See all my reviews

Wealth Odyssey: The Essential Road Map For Your Financial Journey Where Is It You Are Really Trying To Go With Money?

The premise quoting Gross: "...the tales of short-term woe experienced by bubble-burned investors, who constitute a minority of the population, frequently overlook the substantial long-term benefits that accrue to everyone, and the economy at large, in the years after. And if you take the long view - in this case, a pretty long view - it's possible to detect a pattern that emerges in bubbles and their aftermaths." Quoting elsewhere, "And this is not to say that all bubbles are good for the economy. ... To repeat, they're useful only when they leave behind a commercial infrastructure that others can use." Indeed, infrastructure remains along with burned investors.

Gross then goes through many examples: telegraph, railroads, financial new deal, internet, real estate, and alternative energy. In his conclusion, prices of commodities and raw materials are generally leading indicators of a coming bubble and pop (his first of six rules). Note this review is written in the aftermath of the housing bust and ensuing credit crunch at a time when commodity prices have risen.

What's the next bubble and pop? One can only tell after it's happened. During boom times, there's no end in sight. During busts, there's no end in sight. Why is this?

Two other books may help answer that by looking at how we behave:
Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich by Jason Zweig.
Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely.

Global demand is intertwined with human behavior.

There are a few annoyances mentioned by other reviewers - however, the message is more important than the delivery; a message often forgotten - until next time. A message many in business have studied through business cycles - and forgotten - until next time. We as humans do this to ourselves - greed - both on the part of the investor piling in capital, and the company/industry romancing the capital to build their promises. Both get burned in the pop, and blame someone else.

However, in the long run, society benefits. Then we do it again somewhere else "where it's going to be different this time."