# Are We Doing This Again? Andrew Ross Sorkin on “1929” and the GoodFellows on 2025 Source: https://www.youtube.com/watch?v=nts6pFM2BAA Recap page: https://rapidrecap.app/video/nts6pFM2BAA Generated: 2025-12-17T19:37:42.617+00:00 --- ## Quick Overview Andrew Ross Sorkin argues that the 1929 market crash was a misunderstood financial disaster, where policy choices following the initial crash, rather than the crash itself, caused the Great Depression, a parallel he sees in current market dynamics involving leverage and technological shifts like AI mirroring the 1920s radio mania. **Key Points:** - The greatest misunderstanding of the 1929 crash is the myth that it happened in one day and magically caused the Great Depression; Sorkin asserts the crash was the first of several dominoes, with subsequent policy choices leading to the depression. - Sorkin finds strong parallels between the 1920s, characterized by the democratization of finance and the technological boom around radio (the 'Nvidia of its time'), and today's environment with AI as the backdrop and efforts to democratize finance. - A key technological factor in 1929 was the physical plumbing issue: stock prices on the ticker tape were often 3, 4, or 5 hours behind, causing indiscriminate selling as people could not ascertain the actual price. - John Cochran noted that by the end of 1929, the stock market was only down 17%, but the downdraft between September and November 13th was about 50%, leading people leveraged 10-to-1 to sell homes and mortgage houses. - The panelists agreed that policy mistakes in the wake of the crash, such as the Fed failing as lender of last resort and banking regulations preventing small bank recapitalization, caused the Great Depression, not the stock market crash alone. - Sorkin reveals that the Glass-Steagall Act, often credited to Senator Carter Glass, had half its bill written by a banker trying to disadvantage another banker, illustrating historical crony capitalism. - If the market drastically declines in 2026 under a Republican President and Congress, Sorkin predicts Democrats win the House, leading to gridlock, which he suggests the market would like. **Context:** The Hoover Institution's 'Goodfellows' broadcast, featuring historian Sir Neil Ferguson, economist John Cochran, and former National Security Advisor HR McMaster, hosted financial journalist Andrew Ross Sorkin to discuss his book "1929: Inside the Greatest Crash of Wall Street History." The conversation centered on re-examining the causes and consequences of the 1929 market crash and drawing parallels to contemporary economic conditions, particularly concerning leverage, technology manias, and the role of policy responses. ## Detailed Analysis Andrew Ross Sorkin challenges the popular narrative of the 1929 crash, emphasizing that the subsequent Great Depression resulted from policy failures, not the crash itself, noting the market was only down 17% by year-end 1929. He draws strong parallels to the 2020s, pointing out the 1920s' 'democratizing finance' movement and technological wonder stocks like RCA mirror today's environment driven by AI. Sorkin highlighted that poor market plumbing, where stock quotes lagged by hours, fueled panic. John Cochran stressed that banking regulations against branch banking caused the failure of small banks, which led to the depression, not the failure of large New York City banks. The panelists discussed that the Fed's inaction (not throwing money at the problem) contrasted sharply with the successful playbook used in 2008. They also explored historical cronyism, noting that key legislation like Glass-Steagall involved self-interested lobbying, and discussed the shift of lending activity to the unregulated private credit industry post-2008. The discussion concluded with speculation on 2026 politics, suggesting market downturns might lead to gridlock, which the market might favor. ### 1929 Crash Reassessment - Crash was the first domino, not the sole cause of the Great Depression - Policy choices created the magnitude of the depression - People leveraged 10-to-1 were wiped out by a 50% downdraft before year-end ### Technological Parallels - 1920s saw radio mania (like today's AI) driving speculation - Phrase 'democratizing finance' used then and now - Inequality levels are comparably high in both eras ### Market Plumbing Issues - Physical technology undermined confidence as stock prices lagged by 3-5 hours - People gathered outside the NYSE physically trying to learn stock prices - Margin lending created an illusion of a free call option ### Regulatory History and Critique - Glass-Steagall was half-written by a banker trying to 'screw over another banker' - Panelists debate if post-2008 regulations helped or if the disease was the cure - Current concern shifts to the unregulated private credit industry lacking transparency ### Treasury Secretary Roles - Scott Besson's role under Trump is more hands-on and public-facing than Andrew Mellon's under Hoover - Mellon worked behind the scenes cutting the top marginal tax rate from 70% to 20% during Coolidge's quiet tenure ### Political and Economic Outlook - Hoover lost the election due to his stance on Prohibition, not the economy - Current axis of aggressors (China, Russia, Iran, North Korea) are interconnected and fundamentally weak economically - Market might favor gridlock in 2026 if Democrats take the House