20 Years Ago Today, Black Monday, and We Have Learned Nothing

Some background for those too young to remember: On October 19, 1987, the Dow collapsed, losing 22.6 %, and the S&P 500 fell by 20.4 percent. This was the largest single day loss in the history of Wall Street.

I recall turning on the news 10 minutes late, and seeing that the 2nd story of the day was that we had "shelled an Iranian oil platform". I was surprised, and I wondered what on earth happened to bump a story like that off the lead^*. As I found out later, that story about the naval engagement was even bigger than I had thought. It was not just shelling an oil platform, it was the largest surface engagement since the end of World War II, with half the Iranian navy being sunk.

Nouriel Roubini has an article in Foreign Policy, Have We Learned the Lessons of Black Monday?, which asks that question.

His answer, and mine, are both an emphatic "No", though for different reasons.

Dr. Roubini looks at the market fundamentals, and draws some disturbing similarities with 1987, while I look at the increasing pace of deregulation of securities markets since the Carter administration, and draw parallels with 1929.

Non only have we not learned lessons, but we have unlearned lessons, because too many people make too much money as a result of this stupidity.

^*Yes, the good old days, when They Who Must Not Be Named would never be given the lead story on the evening news.