Be very wary when you start reading a flood of stories in the papers about how ordinary folks are getting rich because all the fusty old economic rules no longer apply. A few months before the Black Monday crash of Oct. 19, 1987, Time reported on the rise of the individual stock investor. In 1996, the New York Times had a story on how all the smart money was flooding into Asia - not long before the Asian currency collapse. That same paper had already told us in 1995 about how easy it was becoming for technology companies to go public even if they weren't profitable. Hence the dotcom bust a few years later. And just before the subprime mortgage meltdown - well, you remember that one.

All those accurate-at-the-time stories have a home in Michael Lewis' timely anthology, Panic: The Story of Modern Financial Insanity, a readable guide to how we got into our current mess. For our rueful edification, Lewis collects and explains contemporary accounts of the four most recent panics, in 1987, 1997-1998, 2000-2001 and the one we're in now.

The writers range from economist/columnist Paul Krugman (already gloomy in 1998) to humorist Dave Barry (boy, was he right about the real estate insanity). It's easy to make fun of the optimists in retrospect, but there were also plenty of warnings in each case. John Cassidy predicted the mortgage meltdown in the New Yorker as long ago as 2002.

Lewis' own writings are among the best, both at the time and in the introductory chapters to the anthology's sections. He calls our era the "Age of Financial Unreason," when traders take complex risks they fail to understand, are briefly apologetic - then go right back to doing the same thing in some slightly different arena, still disconnected to the human misery they can cause. The difference now, Lewis points out, is the sheer scale of the catastrophe. No true reforms took place after the first three panics considered in this book. Maybe the time has come.

Anne Bartlett is a journalist in Washington, D.C.

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