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A New York Times bestseller The Great Deformation is a searing look at Washington's craven response to the recent myriad of financial crises and fiscal cliffs. It counters conventional wisdom with an eighty-year revisionist history of how the American stateespecially the Federal Reservehas fallen prey to the politics of crony capitalism and the ideologies of fiscal stimulus, monetary central planning, and financial bailouts. These forces have left the public sector teetering on the edge of political dysfunction and fiscal collapse and have caused America's private enterprise foundation to morph into a speculative casino that swindles the masses and enriches the few. Defying right- and left-wing boxes, David Stockman provides a catalogue of corrupters and defenders of sound money, fiscal rectitude, and free markets. The former includes Franklin Roosevelt, who fathered crony capitalism; Richard Nixon, who destroyed national financial discipline and the Bretton Woods gold- backed dollar; Fed chairmen Greenspan and Bernanke, who fostered our present scourge of bubble finance and addiction to debt and speculation; George W. Bush, who repudiated fiscal rectitude and ballooned the warfare state via senseless wars; and Barack Obama, who revived failed Keynesian borrow and spend” policies that have driven the national debt to perilous heights. By contrast, the book also traces a parade of statesmen who championed balanced budgets and financial market discipline including Carter Glass, Harry Truman, Dwight Eisenhower, Bill Simon, Paul Volcker, Bill Clinton, and Sheila Bair. Stockman's analysis skewers Keynesian spenders and GOP tax-cutters alike, showing how they converged to bloat the welfare state, perpetuate the military-industrial complex, and deplete the revenue baseeven as the Fed's massive money printing allowed politicians to enjoy deficits without tears.” But these policies have also fueled new financial bubbles and favored Wall Street with cheap money and rigged stock and bond markets, while crushing Main Street savers and punishing family budgets with soaring food and energy costs. The Great Deformation explains how we got here and why these warped, crony capitalist policies are an epochal threat to free market prosperity and American political democracy. Read more
Publisher : PublicAffairs
Publication date : April 2, 2013
Edition : First Edition
Language : English
Print length : 768 pages
ISBN-10 : 1586489127
ISBN-13 : 20
Item Weight : 2.46 pounds
Dimensions : 6.46 x 2.48 x 9.45 inches
Best Sellers Rank: #1,256,961 in Books (See Top 100 in Books) #47 in Government & Business #55 in Free Enterprise & Capitalism #76 in Economic Policy
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Top Amazon Reviews
Format: Hardcover
This is going to be a review of David Stockman's 768-page tome The Great Deformation, and 0831-deform although I never thought it was possible, it makes me angry to write this book review. I'm not angry because I don't like the book. On the contrary, this is the best economics book I've ever read. Indeed, it may be the best and most influential book I've ever read in my life. I only wish I had read it the moment it was published in April 2013. I only finished reading it today, and for the entire time I've been plowing through it, I've been trying to think of what I would say in this review. Why am I angry, then, to write this? Bluntly stated, because nothing I can say will make what I want a reality. And what I want is for every literate person in the United States to read this book, cover to cover. I want them to read it. I want them to understand it. I want them to agitate for the changes that it recommends. But I know at the outset that none of that is going to happen. The vast majority (I'll pull a number out of the air and declare it as 90%) are too lazy, dim-witted, or apathetic to bother. And that 90%, I daresay, is a kind estimate. I would also wager that another 1% - - and that would be the fabled 1% which enjoy a storied existence at the top of the socioeconomic heap - - would be wholly irrational to embrace any of the core shifts that the book recommends. These elites, after all, are the beneficiaries of the madness elucidated therein. Reagan's Stockman 0831-stockmanLet's back up. As those of you born before 1970 hopefully recall, David Stockman became nationally famous when, still in his mid-30s, he was made the budget director of the newly-elected Reagan White House. Stockman was front and center in national news for years, and I clearly remember, even as a young teenager, reading about Stockman and the battles he was waging to invoke the so-called Reaganomics. My general impression from that time was that he was smart, capable, and committed. Then, as of the mid-1980s, just like most of the rest of the nation, I stopped hearing about him. I consider myself well-read, and I have the luxury of time to stay abreast of most financial and economic news. In spite of this, if you had asked me several months ago what had ever happened to David Stockman, I would have had absolutely no idea. I daresay most of you are in the same boat, so in brief, I'll bring you up to speed: After leaving the Reagan administration, Stockman joined Salomon Brothers and later was one of the earliest partners of the Blackstone Group. Years later, he went on to found his own private equity firm, Heartland Industrial Partners, for which he initially raised well over a billion dollars. Heartland executed over twenty deals, one of which - Collins & Aikman - filed for bankruptcy. Stockman served as CEO at Collins, and early in 2007, he became the target of federal prosecutors in Manhattan as well as the SEC. From the little I've read about this period, the charges were completely ludicrous, and after wrecking nearly two years of Stockman's life (as well as those of many others), the prosecutors dropped the entire fleet of charges well before a trial could even commence. From what I can gather, Stockman's mounting of his defense during the period of his prosecution his come-to-Jesus moment, since it dawned on him the nature of the business game he had been playing for so many years. Specifically, the hazards of the debt-saturated private equity world and, much more broadly, the entire globe that had become utterly besotted by debt. Stockman writes: At length, I saw the light, and it had nothing to do with Paulson's apparent illiteracy on the precepts of sound fiscal policy. The bailouts, the Fed's frenzied money printing, the embrace of primitive Keynesian tax stimulus by a Republican White House amounted to something terrible: a de facto coup d'etat by Wall Street, resulting in Washington's embrace of any expedient necessary to keep the financial bubble going - and no matter how offensive it was to every historic principle of free markets, sound money, and fiscal rectitude. Stockman thus endeavored to put together this book that is fervent, passionate, articulate, and remarkable in scope. And I kept wondering to myself, if the villains in the book (Paulson, Bernanke, Obama, the corpse of Richard Nixon, Larry Summers, Yellen, etc.) actually read it, would they think to themselves (A) "Oh my God, what have I done?????" or (B) "Crap, they're on to us." Notable Quotes My copy of the book is highlighted as heavily as the Bible of a Southern Baptist preacher, so it's hard for me to "boil down" the book to anything less than a fifty page review. I will just share a few morsels that I think help capture some of the points Mr. Stockman wants to make and the elegant fashion in which he presents them: "This was a blatant miscarriage of governance. As will be seen, at that late stage of the delirious financial bubble which had overtaken America, Goldman Sachs and Morgan Stanley had essentially become economic predators. Their bankruptcy would have resulted in no measurable harm to the Main Street economy, and possibly some gain. It would have also brought the curtains down on a generation of Wall Street speculators, and sent them packing in disgrace and amid massive personal losses - the only possible way to end the current repugnant regime of crony capitalist domination of the nation's central bank." (p. 22) "In a healthy capitalist economy, income distribution reflects the economic justice of the marketplace, not the political engineering of the state, and properly so." (p. 68) "Policy measures like Fannie Mae, deposit insurance, social insurance, the Wagner Act, the farm programs, and monetary activism share a common disability: They fail to recognize that the state bears an inherent flaw that dwarfs the imperfections purported to afflict the free market; namely, that policies undertaken in the name of the public good inexorably become captured by special interests and crony capitalists who appropriate resources from society's commons for their own private ends." (p. 169) "The Thomas Amendment was a nascent version of today's delusion that economic setbacks, shortfalls, and disappointments are caused by too little money. The true cause, both in the early 1930s and today, was actually an excess of debt. This explanation is never appealing to politicians because there is no real cure for the liquidation of excess debt, except the passage of time and the forfeiture of the ill-gotten gains from the financial bubbles preceding it." (p. 183) It was around this time that I realized even sharing the very best of the best quotes, there would just be far too many, so I jumped toward the end of the book...... "The social insurance system is now entering an era of permanent funding crisis and chronic political turmoil. And, as detailed in chapter 32, the Bernanke stock market bubble is heading for a thundering meltdown which will vastly eclipse that of September 2008. So what lies ahead is endemic fiscal crisis, wrenching financial market dislocations, and relentlessly rising fear about financial security on Main Street." (p. 648) "Only a financial system addicted to and whipsawed by central bank money printing can produce such erratic, capricious, and correlated results. What is implicated here is not the doings of the free market but the corruption of free money. For that reason, the Greenspan axiom that financial bubbles can't be prevented but only punctured and then bailed out afterward is downright perverse. Now in its third iteration, this policy is, in fact, the backstage mechanism by which society's income and wealth are being redistributed to the top 1 percent." (p. 656) "While this is seemingly ironic given that Obama was reelected essentially on a platform of "fairness" for the middle class, that was content-free campaign rhetoric. The true irony is that political progressives are so indentured to Keynesian theories of demand stimulus that they have eagerly turned the nation's central bank over to Wall Street lock, stock, and barrel." (p. 657) "The cruel corollary is that free market capitalism cannot help, either. It has been abused, burdened, demoralized, and impaired by decades of central bank money printing and the speculative raids and rent-seeking deformations which it fosters. Now the White House has a vague mandate that the 1 percent should pay more, but it's too late. The coming crash will leave a lot less to tax." (p. 671) The Rogue's Gallery There are some definite "bad guys" (and bad events) skewered in these nearly 800 pages. The names are all known to you, but the deeds, and their details, are articulated in ways I didn't understand well until now. These misfits include: + Richard "Tricky Dick" Nixon; + FDR (particularly his debasing of the dollar and confiscation of gold);0831-fatpig + Alan Greenspan's LTCM bailout in 1998; + Alan Greenspan's panicked, rate-plunging response to the Internet bubble collapse; + Alan Greenspan's deliberate inflation of the housing bubble (sense a trend here?); + Larry Summers, pictured here; + The military-industrial complex, wholly and utterly bloated beyond need; + Medicare/Medicaid/Obamacare and the breathtaking price inflation in the medical racket; + The "timorous" math professor Benjamin Bernanke; + The GM bailout, TARP package, and smorgasbord of "relief" programs in late 2008/early 2009 + And, of course, President Obama There are a few heroes mentioned in these pages, such as Fed chairman William McChesney Martin, Paul Volcker, Eisenhower, and Herbert Hoover (the last most particularly for the well-meaning, but aborted, efforts Hoover invoked to aid the nation as it entered Depression, only to be nefariously thwarted by a breathtakingly cynical FDR). The Gospel? Is this book absolutely perfect? Of course not. There are a smattering of typos and misspellings here and there, as one might expect of any book so large that could be used as a weapon of self-defense. It also is peppered with some phrases and expressions that get a bit overused or could be replaced with simpler language (for instance, "it cannot be gainsaid" could just as easily, and more clearly, be expressed by the word "undeniable.") It's also on the long side, and it needn't be quite so lengthy. I personally found a few of the chapters, particularly those oriented toward leveraged buyouts and private equity, to not add much to the polemic. Stockman knows these topics so deeply, it was probably tempting to spend extra time espousing them, not unlike the way I prattled on in my own recent book about the Silicon Valley's Internet bubble. But these trifles shave a hundredth of a point off the 100.00 score I would otherwise give the book. It is written with such clarity, fervor, and well-intentioned intellect that, even forty pages into it, I could hardly wait to climb go my rooftop to tell the world to go buy it. Mr. Stockman's days at the Harvard Divinity School have eased their way into the pages, because the prose has reads like the fiery gospel of a true believer. It goes without saying that these ideas and arguments are not the scribblings of a lunatic standing on the soapbox in Central Park. Stockman occupied the highest levels of government and finance for his entire working life, and he is a wealthy, famous, and well-connected man who could easily, along with the rest of his 1% brethren, rest comfortably on his laurels for the rest of his days. He chose instead to bring to the truth - - the bare, detailed, and important-to-understand truth - - to the rest of us. What Needs to Be Done The final chapter of Great Deformation is the powerful money-shot to the entire tome, but the potency is instantly and honestly neutered by the reality - which Stockman proclaims at the outset - that none of the stated cures will see the light of day. In a word, it's simply too late, and only after a wrenching, worldwide financial cataclysm (that will make 2008 look like a gentle stroll with a lovely lass on a sunlit day) will humanity have the opportunity to get it right. The last real opportunity to set things straight was presented - as Stockman writes - "on a silver platter" - but Washington doesn't have an iota of the political will that would have been required to seize that opportunity. The America today, and particularly the 1%, are far too fat, happy, and accustomed to the easy way out to undergo such a thing. Having said that, even though it will break your heart (or should break your heart) to read what has happened, what probably will happen, and what might have been, you owe it to yourself to read this book. America is too flabby to buck up and face reality, but you as an individual should at least take it upon yourself to understand better than 99% of your compatriots how we got here and what road lies ahead. Thank you, Mr. Stockman.
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Reviewed in the United States on September 1, 2014 by Tim Knight
Format: Kindle
David Stockman believes that our economy is almost past the point of no return. With a staggering federal debt and a deficit that keeps rising, he considers our economy to be a "setting sun" economy- our best days are behind us. But there's still hope, it's not too late to turn it around. The book starts off with details on how, in the past, the banks leveraged capital and how their methods of investment were contingent on a constant upward spiral of success. He goes on to talk about how the fed propped Wall Street up with hopes of creating wealth through the stock market and that he believes they have overstepped their bounds. He criticizes Greenspan for his fiscal policies and compares that bubble to the one we are in today. Most of the book talks about the past and how we can relate it to the present and what we can learn from the mistakes made by our predecessors. The facts and statistics he presents show that the "too big to fail" ideology adopted by the government was incorrect and in fact, many of the companies that received bailouts had sufficient assets to fend for themselves. Using AIG as an example, he outlines the overall sector's strengths and weakness during the crash of 2008. He asserts that during times of financial crisis, such as the crash of 2000, companies would inaccurately portray sales in order to make their company appear more valuable. Highly critical of the Fed, many of his opinions are based around failures of the federal government to correctly manage the economy. Most of the time, he believes that their attempts to bolster the economy stem from pressure from business, rich people, or other government entities. He takes the reader through all of the United States' bubbles since before the Great Depression and explains the causes of each one. According to his statistics, most of the bubbles were caused by the Fed unnecessarily pumping money into the economy. He talks about the $800 billion stimulus and the minimal impact that it has had. He believes Bernanke and Obama are merely buying borrowed time with borrowed money. The most interesting parts are when he quotes grim situations which highlight the depth of corruption in the government and big banks. In one instance, during the financial crisis of 2008, the Chairperson of the FDIC was "rarely consulted" and when she was, she was commanded: "you have to do this or the system will go down." There was "no analysis, no meaningful discussion." She expressed her frustration and explained that it became commonplace for her to be forced to carry out orders without being told the reasons or the end goals behind those orders. Generally, the government was unable to give reasons because they were acting on the whim of large banks. In another story, a head government official recounts the CEO of Goldman Sachs coercing him into providing the banks with bailout, lest their be dire consequences. The book has many shocking stories such as these. Each uncovers a different piece of corruption that, when added up, reveals a frightening picture of our government today. Pros: It was VERY detailed. There were countless facts and statistics to support his arguments and viewpoints. It provided a good snapshot into the inner workings of politics and government monetary policy. He provided factual stories and quotes throughout the book. He focused on many of the large power-players in our economy and their roles in the financial crashes. Cons: The book tended to jump from time period to time period. One moment it's about the Great Depression, and the next, it's current. It can make it difficult to follow at times. It also makes it difficult to review. It can be repetitive. Many of the things are said more than once or they are just reworded. It's a bit dry. Even with the stories and shocking data, I still found it hard to concentrate.
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Reviewed in the United States on April 2, 2013 by Drew Bruckner
Format: Hardcover
If you are someone with a strong political party identity or hold a strong identity with the economists Keynes or Friedman, you will hate this book! However, if you are open to hearing about how modern economic theory has failed us when put to practice in a world where real political actors exist, then this is for you. Stockman painstakingly describes the history of the Federal Reserve, the Great Depression, Nixon's end of the gold standard, and how our departure from sound money practices has over time allowed the US to have "deficits without tears" and has allowed our financial system to become a highly leveraged casino that is increasingly prone to crisis. The hubris of monetarists and Keynesians in thinking that the government could manage our economy either through monetary policy or through deficits/taxation (in other words, thanks to the government, we no longer need Adam Smith's "invisible hand" of the market!) has led to a number of consequences that neither Friedman nor Keynes anticipated - that is the hijacking of our Treasury and central bank by the lobbyists of K Street to rob the public purse and the transformation of our banks into casinos where losses are covered by the taxpayer. The government's spending and taxation policies and the central bank's monetary policies have caused large economic deformations in our economy that have sent the middle class deeply into debt while their wages have been stagnant or even declining in real terms, but letting them "feel richer" by inflating the prices of their homes and other assets while cutting their interest payments (a trend that will soon reverse). In the meantime, US corporations have not been making the investments in equipment, R&D and other productive assets because Wall Street has been strip mining companies in leveraged buyouts. Wall Street and the board rooms of large coroporations have been the major beneficiaries of these deformations as they have learned how to game the system, and Stockman explains in detail the various means they have used to benefit from these distortions. Many of us sense that the US is on an unsustainable fiscal path and that our financial system is rigged. Even if the deficits do drop down to 4% of GDP in 2013, deficits cannot and should not run indefinitely and there is no one in Washington who is seriously talking about getting the budgets balanced. Here we are five years after the financial crisis of 2008 and after the Dodd-Frank bill that was supposed to restore stability to our banking system, and the Shadow Banking System has returned to a point where even Fed Chairman Bernanke has acknowledged its renewed risk to our economy (which has the irony of a Columbian drug cartel leader warning about the dangers of drugs). This book explains the history of how we got to this strange but dangerous place. In addition to pointing out the villains in this saga (Economists Milton Friedman, J. M. Keynes, Fed Chairmen Arthur Burns, Alan Greenspan, Ben Bernanke, Presidents Franklin Roosevelt, Johnson, Nixon, Reagan, and George W. Bush and members of cabinets Casper Weinberger, George Schultz, and LBO king Mitt Romney) who did not envision where the path would lead (Friedman and Keynes) or simply sold out for short-term gain (Nixon, Johnson, Roosevelt) or to assert their power (Weinberger) or were blinded by ideology (Greenspan, Bernanke, Schultz, Reagan) he also points to the heroes. These heroes (Senator Carter Glass, Presidents Truman, Eisenhower, Kennedy, Ford, Clinton, and Fed Chairmen Paul Volker and William McChesney Martin and others) tried to keep us on a path of sound money and balanced budgets. In addition to Stockman's excellent writing skills, this is what makes this book interesting - there are real characters that he describes, and Stockman's knowledge of government and the budgetary process, as well as his experience from the financial industry along with explanations supported by data and analysis, enable him to provide insights to what really happened in a way that few can or frankly want to. This book provides the reader a historical perspective that I don't think exists anywhere else. It will also make you worry, and for good reason, how to protect yourself from the inevitable financial disaster that is waiting for us. The book, while providing a historical perspective, is not in chronological order. Chapters address themes and draw parallels or contrasts from different periods in time. As a result, some of the reviewers have mentioned that the book appears to jump around some, and this is why. If you keep in mind that the book is organized more around themes, the fact that it's not in chronological order won't surprise you. Stockman, who made a fortune in the LBO business admits to his contribution to the mess late in the book. He acknowledges that while he was in the financial bubble (that he compares to the unreal and scripted world of the Truman Show) that he really thought that stripping companies and saddling them with enormous debt as he did at Blackstone was making them more efficient. That was the thinking of everyone around him and no doubt what Mitt Romney believes about himself. But, upon reflection after some legal issues (he was charged with accounting violations that were dropped) relating to one of the companies that he led through a Blackstone LBO, Stockman recognized that, rather than making the company more efficient, he had actually gutted the company and left the company with so much debt that it could not survive even a minor economic downturn. And, in the book he identifies and details how so many companies in the US have gone down this same path, either through LBO for private companies or, in the case of publicly traded companies, management equity withdrawals where managment issues debt to purchase stock and then gives a large portion of that purchased stock to the top management. What has made all of this possible is low interest rates that are not set by free market forces, but by Fed intervention, and taxation policies that favor capital gains over dividends. And, this realization is led drove Stockman to examine how these economic distortions have affected our economy, our financial markets, and our government. Now, I don't personally agree with every conclusion that Stockman reaches, but there is too much good about this book to take a star off. The positive attributes of this book are really overwhelming. If you have an open mind you can enjoy the comprehensive history Stockman gives of how we got to where we are today and the meticulous use of supporting data without getting too hung up about differences in opinion with Stockman about where we need to go from here. In fact, I think the first chapter, which sort of captures much of what he will discuss might seem a bit off-putting at first because it sounds like he's letting off steam (he probably is). If he were to re-write the book, this is where I'd put his mea-culpa that is saved for later. But, read on. Much is explained in later chapters, and you may find yourself feeling as angry as Stockman once you get into the book. The last chapter discusses where he thinks we should go from here. Some of his recommendations are completely impractical and would require constitutional amendments. Others, like restoring sound money, bringing back a Glass-Steagall separation of investment and commercial banking) are spot on and consistent with what folks like Paul Volker (possibly the greatest Fed Chairman we have ever had) have preached. So, take the good with the bad because the good in this book far outweighs the bad. A word of caution, if you don't have a very solid background in economics and finance, this book will be a tough read. Stockman uses a lot of terminology that the average person probably isn't familiar with. The book is also pretty long as far as this genre of books is concerned, but it certainly is not boring. While long, it is a good read.
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Reviewed in the United States on May 9, 2013 by JS
Format: Hardcover
As a political scientist, I could not stop reading this book. I now have notes in it from front to back. Of the 60 plus books I've purchased on America's evolving economic quagmire, this is clearly the most informative, insightful and expertly written. The book is a masterpiece of historical knowledge, moral reason, financial insight and sardonic wit. The author is erudite yet his book is approachable for college educated readers. He is non-partisan and equally critical of the mistakes of both parties and their leaders. While he has not written a cheery book, it is anything but downbeat, since the superb educative value of the book enlightens and empowers. The work is no rant or harangue. It is not an act of bashing government. It is an articulate, frank and powerful assessment of how ignorance and greed have combined to reduce the American prospect through the deformation of our core values and political system. Admittedly, the book sees a "sundown" era coming, with a debt crisis by the end of this decade (576, 648, 659, 671). Along that vein, Stockman offers thirteen recommendations (some involving constitutional amendments) that might reduce pending damages. STOCKMAN'S BACKGROUND Stockman is transformed since his own Waterloo (572-75). Now, he abhors the way that central bankers help financial elites plunder the world economy. Earlier, he was a political wonk, three-time Congressman, and OMB Director (appointed by President Reagan in 1981). After leaving politics, he spent most of two decades as a private equity player for big Wall Street banks and as head of his own firm. Admirably, when his CEO experience came to a calamitous end in 2005, he was man enough to admit his greed and mend his values. Now, with his extraordinary understanding of the financial and political landscape, he sets about to help his country find its financial morality anew. THE FOOTNOTE CONTROVERSY Some reviewers complain that Stockman's work--rich in statistics, case reviews, historical data and insider knowledge--does not use footnotes. Considerations of this nature are important to college professors (like myself). As Stockman explains in his endnote on sources (which he divulges), his work of interpreting and patterning economic developments does not lend itself to the footnote approach. This is reasonable. Stockman's data squares with widely disseminated information about the events he explores. His work demonstrates so much savvy interpretation and discernment that to footnote arguments would involve erroneously attributing to other writers nuanced conclusions for which they are not responsible. Thus, I have no quibble over Stockman's documentation. CONTENT OUTLINED BY BOOK SECTION PART I of the 34 chapter book introduces the 2008 financial panic with a perceptive narrative, factual gleanings, wry and sardonic anecdotes, and a scathing discussion of the nature and extent of crony capitalism that fostered the 2008 crisis and our current environment. PART II of the magnus opus explores the Reagan era as viewed by one of Reagan's best placed counselors. The endeavor is assisted by recourse to the Nixon era, the birth of the GOP's anti-tax religion, and the triumph of the welfare state in America. This section reveals an arsenal of micro-details and macro-financial facts. PART III evaluates New Deal episodes and myths, the twilight of sound money, and President Eisenhower's last stand for fiscal rectitude. People who think there is something worthwhile in a gold standard will relish much of this section. Stockman builds a case that a properly designed gold-based system can reduce the ability of central bankers to pursue asset inflation at a cost to the sustainable public interest. That said, a gold system would need a new design to work. (There are, perhaps, other ways to make central bankers toe the line.) PART IV contains 13 chapters that cover a vast landscape stretching from the rise of speculative finance through bull market cultures, roads to quick riches, serial bubbles, the Fed's subsidy of gambling manias and various other deformations of economic sanity. Along the way, Stockman shows how trillions of dollars of wealth has been transferred from America's workers to a sliver of the nation's elite. It is likely the greatest legalized robbery of all time. PART V wraps up the book with 8 chapters specific to recent political and economic events, mostly during the Obama era. One chapter in particular, "The Bernanke Bubble," has many observations that deserve airings at white tie events. Something has to awaken the consciences of those on the receiving end of an asset playing field unfairly tipped. COMPARISONS AND SUMMARY While Stockman's book stands in its own class, it resonates with themes in William Greider's 2003 book, "The Soul of Capitalism." It also shares connective tissue with Jeff Gates' work, "Democracy at Risk" and Nomi Prins' perceptive book, "It Takes a Pillage" (2010). As it regards Stockman's claim that the current recovery is "not real or sustainable" and amounts to "reverse Robin Hood redistribution" on behalf of Wall Street (653), similar arguments are found in, "America's False Recovery: The Coming Sovereign Debt Crisis and Rise of Democratic Plutocracy" (2011). In sum, only time will tell whether asset inflation, Fed-style, can heal an underlying Main Street economy. If Stockman errs in seeing a phony economic foundation, he will at least be correct in observing the brazen immorality of the wealth redistribution underway. The trouble is not that some are wealthier than others, but that the central bank has chosen to massively subsidize asset growth for Wall Street's most undeserving elites.
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Reviewed in the United States on May 7, 2013 by Tim Barnett
Format: Hardcover
I put David Stockman's book The Great Deformation as the most complete book about the history of how the US economy has been run for the past 100 years. As I read the first section, I laughed at the vitriol coming from the author and how he took great exception to TARP and the bailout. His views were so DIFFERENT than anyone else. Did I believe it? No, not in the least. But he just kept hammering away with very inconvenient facts that I started to wonder. By the end of the first section, everything he wrote fit together and convinced me. It was a complete 180 for my views and was a complete surprise, something that I would not have thought possible. The other chapters were like lifting a veil for me on the US economy for the past 100 years. How the Great Depression was not about the money supply, how President Eisenhower was an economic hero, the damage that FDR, Nixon, and Reagan did while in office, and the dismal failure by the Federal Reserve to avoid meddling in the US economy. I never heard of any of this! Was it true? Mr. Stockman just kept layering fact upon fact, how his ideas of what really happened fit too well with the results that came later. I have read a couple of dozen books about the US economy (including Mr. Bernanke's book) about why 2008 happened and other topics about the national debt rise, etc. They all seemed to limit their scope to one or two facts or people, housing bubble, Credit Default Swaps, Bush, excessive leveraged debt. But what caused the 2000, 2007, 2013 stock bubbles? Why did stagflation occur and how did Mr. Volcker fix it? How did the national debt grow so big? How did China steal away US manufacturing? The Great Deformation answers ALL of these and so many more, it ties them all into a grand history of people, agencies, and institutions. No one person is to blame, no one political party, no one Fed chairman. It is a LONG book, harder to read due to the anger evident on the pages. I think it was the anger that drove the book, and this is an important book. No other book could weave such a accurate look at US economic history without showing the injustice and heroism that occurred. It goes into economic details that are hard to follow for average readers. Finally, it is scary, could our greatest economists and political leaders really do this much damage? Out of all the books on the US economy today, this IS THE ONE TO READ. It is worth the patience to wade through the book. None have the scope, none have the depth, and none have to willingness to tackle the rosy mists of myth that are what passes for history. I am a hardened skeptic and it convinced me.
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Reviewed in the United States on October 14, 2013 by John E. Pombrio
Format: Hardcover
I have completed about 50% of the book. I will complete it but it is not something that I can read non-stop. I purchased the hard bound edition as I expected graphs and tables. However, it has neither so the Kindle version would be a better choice. Tables and graphs would have helped. Stockman provides a lot of details but he skips from the 1920s to present day for one thread of his issues and then goes back to the 20s for another thread. I would have preferred that he discuss all issues of a specific administration to the next. before going to the next generation . I am learning a lot but believe he is too negative. It seems that Stockman has not seen a government program that he likes. Maybe he believes that there is not a valuable program but he should discuss his theory of the alternative, without government help. The discussion of gold is especially interesting. He is non-partisan, as he critiques (and finds fault) with both parties. I was surprised at the criticism of the Reagan administration as Stockman was in the first term administration. I suspect that he will be very critical of the Obama administration but I may not have read sufficiently far in the book. It is likely that there may be another thread or two that will involve Obama. He is particularly critical of George W. Bush. The Federal Reserve receives a significant amount of attention. Little is positive. His critique of SS is interesting. He believes that SS started as a welfare program and continues as such. He observes that it would not pass congress, if it was discussed as such. This is one thread that I would have liked to hear his alternatives. I think what I am learning out weighs the issues that I have with the book. I recommend it but be prepared for a commitment.
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Reviewed in the United States on May 4, 2013 by Consumer 100
Format: Hardcover
UPDATE - 5/24/13 I have finished the book and have added a star to my rating (from 3 up to 4 stars). While I agree with other reviewers that this book is way too long, I also must admit that it is the breadth of detail (albeit without footnotes) which is the basis and strength of the author's argument. It is very persuasive as it leads the reader through a century of fiscal policy decisions that have brought us to this point in time. Ironically, the week I finish the book is the same week as the Fed is "hinting" at "winding down" their plans for Quantitative Easing. And, as predicted, the Wall Street record high's have pulled back at the mere "hint" of change. My 401K management company sent out a message the same week with the title "Why the stock rally may continue". Hah! Not if you believe Stockman. There are several important caveats to my new rating: -- My 4-star rating is strictly for the content of Mr. Stockman's argument; not his writing. -- He absolutely should have documented his sources to vastly improve this book for the reader. -- It is not an easy read. Mr. Stockman uses rare vocabulary that made me glad to have a built-in Kindle dictionary. He also assumes a level of economics and high finance understanding without a great deal of explanation for the average reader. -- While interesting content, it is dry and can also be used as a sedative if you are having trouble sleeping. -- Don't expect much in the way of a happy ending. Mr. Stockman's solutions are idealistic to the point of preposterous in today's economic and political reality. This is a point he freely admits. And he has no advice or guidance for the average American on how to protect themselves from the crash that he believes is inevitable. Mr. Stockman has been widely ridiculed for his NYTimes article which was penned in conjunction with the release of this book. I find it interesting how few of his critics are reviewing the book, only the article. At this point, tragically, it is just wait and watch for Mr. Stockman's view of the future to come true... or not. Based on reading his 700+ page book, I am fairly convinced that he will be proven right, even as everyone continues to deny deteriorating data and then apply the wrong fixes. ORIGINAL REVIEW - 4/23/13 I am giving this book three stars because I am not done reading it. Based on what I have read so far, I would give the content (so far) "five-stars", but the lack of substantive support provided in the book makes me want to give it just "one-star". If I finish it, I will revisit this review and my rating. However, I am not sure I will finish it because I am extremely dismayed at the lack of support provided by the author for the statements he makes and the foundations for his arguments. No other reviews seem to highlight this egregious lack of supporting data in the book. While the information the author presents is compelling, I kept finding myself asking "really? where did you get that information?". There are no footnotes and no endnotes in this book. However, there is a chapter at the end titled "Notes on Sources". The first two sentences of those six pages are as follows: "It goes without saying that this book is a polemic that does not pretend to marshal the pro and con arguments in an even-handed academic fashion. It contains much original interpretation of financial and public policy events and trends of the last century, even a revisionist framework." He does go on in the chapter to cite a few sources for his data (ie Fed. Reserve Economic Data, Z.1 report), but as a reader I don't want to have to re-do the author's research in order to verify the facts he is using to justify his conclusions. Still deciding if I want to spend more time on this 768-page book that is both fascinating and frustrating...
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Reviewed in the United States on April 23, 2013 by T. Huse
Format: Hardcover
David Stockman is pissed. Seven hundred forty two pages worth of pissed. And he wants you to know it. If you're under 30, Stockman was once famous for daring to criticize then-President Reagan's economic policies. Stockman was the budget director, and for his truth telling he received a one-way ticket to Reagan's "woodshed," where he was undressed and spanked for daring to share his contrarian views. Fast forward to the present moment. Stockman is angrier than ever--at Reagan, at FDR, at Nixon, at Barack Obama, at Alan Greenspan and Ben Bernanke, at above all, at Hank Paulsen and his fiscal buttboy, George W. Bush. He has written the most important book on the American and world economy in the last 50 years, and his outrage, unrepentant fury, name-calling, and overall orneriness--not to mention his myth-busting and unassailable and often astonishing research--make the book a must-read for everyone who pays taxes, owns a home, buys stock, or ever hopes to retire without becoming a ward of the state. The Great Deformation: The Corruption Of Capitalism In America (Public Affairs, $35) clearly went unedited; no one dared. The book is indifferently organized, rampant with repetition, and prone to errors in basic math. Yet what would an editor venture to say to an author who calls FDR "a relentless dilettante with an affinity for quixotic schemes and downright quackery"? Or Richard Nixon "feckless" and the creator of a financial "abomination." Milton Friedman: "profoundly erroneous." The Fed in general: "pusillanimous." Fed Chair Ben Bernanke: "In the wrong high office at the worst possible time." Secretary of the Treasury Hank Paulsen: "emotionally unglued and hysteria-gripped." And lately? The "uniquely unfit" Mitt Romney's "winnings from bubble finance during his years at Bain Capital were so preposterously impossible in an honest free market that is no wonder that his 2012 campaign amounted to one giant platitude." To be fair, Stockman's an equal opportunity destroyer. Stockman decries President Obama's "reckless, unspeakable folly" as "an unnecessary and inappropriate fleecing of American taxpayers" and "a naked exercise in borrowing from the future on Uncle Sam's credit card." So Dave, name-calling to one side, where's the beef? Stockman's outrage rightly focuses on almost a century of governmental mismanagement of the economy, from FDR's insouciant trashing of the gold standard, the underpinning of the world economy, which unleashed the forces that led to World War II; Nixon's 1971 wage-and-price controls, which brought in their wake the high inflation and double-digit "misery index"; through the outrageous Reagan-Weinberger imperialist military buildup; all leading up to the crony capitalism that nearly destroyed the world economy in the 2008 meltdown. He decries as myth these ideas: * FDR's New Deal ended the Depression (it prolonged it); * The Depression signaled a failure of capitalism (no, the Depression resulted from trade protectionism and the late 1920s stock market bubble that temporarily took down the farm and industrial sectors of the economy); * The Reagan military buildup took down the Soviet Union (it was DOA economically by the time Reagan was elected and the vast military bequeathed to Reagan's successors made possible the Iraq and Afghanistan wars without Congressional approval); * GM was on the verge of collapse in 2008 (actually, GE CEO Jeff Immelt's bonus was on the verge of collapse and GM would have recovered without government intervention); * And the biggest Big Lie of all, that the world economy was teetering on the edge in 2008 (Treasury Secretary Hank Paulsen and a few other "feckless bailsters" headfaked a compliant, moronic George W. Bush and a terrified Congress into rescuing Wall Street from nearly a trillion dollars of its drunken sailor-style gambling losses). A little bit of history, folks. In the first half of the 20th century, two economic theories competed for world primacy. One was Keynesian thinking, which says that you contract the money supply when the economy is strong and print more dollars when it's weak, and thus control the business cycle. The other was the brainchild of von Hayek, an Austrian economist who believed that the free market could manage itself without the intervention or manipulation of central banks. Keynes was charming and eloquent; everybody loved him. Frederick Von Hayek was a lousy public speaker with a scruffy beard and an impenetrable German accident. No one liked him. In short, Keynes won, influencing everyone from FDR, Carter and Obama (overtly) and Nixon, Reagan, both Bushes, and a bunch of Fed chairmen including Alan Greenspan and Ben Bernanke (covertly). As a result, whenever the economy's a mess, like right now, the government prints gazillions of hundred dollar bills, hoping that people will spend their way into prosperity. Which is as ridiculous an idea as it sounds. The problem is that pretty much everyone, with the exceptions of Dwight David Eisenhower and his Fed chair William McChesney Martin, Paul Volcker, and David Stockman himself, have been drinking Keynesian Kool-Aid for eight decades. The result: "Sunset in America," in Stockman's cruel twist on his former boss Reagan's 1984 campaign slogan, "Morning in America." At the end of his exhausting (for author and reader alike) tome, Stockman does provide a lengthy section on solutions, none of which are likely ever to be implemented, including a return to the gold standard and sound banking, the abolition of the electoral college, and a single, six-year Presidential term, so that people like Obama can only do so much damage. "Required reading" is an overused term. In fact, proof of reading The Great Deformation should become a requirement for voting. Bring your dog-eared copy to the polls or stay home. I don't think I'd want to have David Stockman babysit my four young children - the name-calling in which he would likely engage will scar them for life. But the smartest guy in the room has written a compelling, intensely readable book that exhumes aspects of economic history that both Democrats and Republicans likely wish would have stayed hidden. The Great Deformation is the book that everyone in Washington, at the White House on both sides of the aisle in Congress, at the Treasury, and in the lobbyists' offices on K Street, fervently prays that you never read.
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Reviewed in the United States on May 24, 2013 by Michael Levin