Transcription
>> AND THAT'S YOUR LATEST WEATHER. SEVEN-NINE.
>> AL, IT HAS BEEN A CENTURY SINCE THE INFAMOUS STOCK MARKET CRASH OF 1929 THAT LED TO THE GREAT DEPRESSION. ONE OF THE MOST CONSEQUENTIAL MOMENTS OF THE 20th CENTURY. WELL, IN HIS NEW BOOK CNBC HOST AND "NEW YORK TIMES" COLUMNIST ANDREW ROSS-SORKIN IS REVEALING BEHIND-THE-SCENES STORIES OF HOW IT HAPPENED AND WHY IT HAS MORE RELEVANCE TO TODAY THAN EVER BEFORE. THE BOOK IS CALLED "1929: INSIDE THE GREATEST CRASH IN WALL STREET HISTORY AND HOW IT SHATTERED A NATION." ANDREW, GOOD MORNING. YOU WROTE "TOO BIG TO FAIL" ABOUT THE 2008 FINANCIAL CRISIS. IN A WAY THIS IS THE PREQUEL. IT'S ALSO KIND OF A PREVIEW, POTENTIALLY, OF WHAT COULD HAPPEN. SO WHY DID YOU GET INTERESTED IN THIS SUBJECT?
>> WELL, PARTIALLY BECAUSE I DIDN'T WANT TO HAVE TO WRITE A SEQUEL, SO I FELT LIKE -- LET'S HOPE WE DON'T HAVE ONE. WE ALL KNOW THAT SOMETHING BAD HAPPENED IN 1929, THE GREAT DEPRESSION, THE CRASH, BUT I THINK MOST PEOPLE, INCLUDING MYSELF, TO BE HONEST WITH YOU, DIDN'T KNOW WHAT REALLY HAPPENED. WHAT WERE THE PEOPLE SAYING TO EACH OTHER? WHAT WERE THE POLICY CHOICES? AND IT'S SUCH A DRAMA, THESE CHARACTERS, TO ME, WERE JUST SO FASCINATING WHEN I GOT INTO IT AND STARTED GETTING INTO THE ARCHIVAL MATERIAL. I SPENT EIGHT YEARS TRYING TO REALLY CREATE THESE SORT OF CINEMATIC SCENES OF WHAT ACTUALLY HAPPENS SO THAT YOU COULD ACTUALLY REALLY SEE IT AND, YOU KNOW, THERE'S AFFAIRS AND PEOPLE ARE COMMITTING SUICIDE AND ALL SORTS OF WILD THINGS ARE HAPPENING.
>> THIS TIME REALLY COMES ALIVE IN THIS BOOK. I MEAN, SET THE SCENE FOR US A LITTLE BIT, BECAUSE THERE WAS A BIT OF THE WILD WEST WHERE SUDDENLY EVERYBODY -- ANY PERSON ON THE STREET COULD INVEST IN THE STOCK MARKET. EXPLAIN HOW THAT DYNAMIC LED TO THE TROUBLE.
>> NOBODY IN AMERICA TOOK ON CREDIT BACK IN THE DAY. NOBODY TOOK ON A LOAN. THAT WAS A MORAL SIN. IT WAS A MORAL SIN, AND IN THE 1920s, BECAUSE OF GENERAL MOTORS, WHICH ED LOANING PEOPLE TO BUY CARS, WALL STREET CAUGHT ON AND BROKERAGES EMERGED LIKE STARBUCKS. YOU COULD WALK INTO A BROKERAGE HOUSE AND BET ON A STOCK. YOU COULD PUT DOWN A DOLLAR. THEY WOULD LOAN YOU $10. AND FOR A WHILE IT WAS LIKE FREE MONEY. I MEAN, THE STOCK MARKET WENT UP BETWEEN 1928 90%. THE WHOLE THING WAS -- THE WHOLE CITY WAS ALIVE IN THIS SORT OF WILD, WILD WAY. AND, YOU KNOW, WHEN YOU GO LOOK -- AND THEN IT CRASHED. THERE ARE FAMOUS PICTURES OF EVERYBODY DOWN OUTSIDE THE STOCK EXCHANGE. THE REASON THEY HAD GONE DOWN THERE WAS BECAUSE YOU COULDN'T GET INFORMATION ABOUT WHERE YOUR MONEY HAD GONE, SO PEOPLE WOULD GO TO THE BROKERAGE HOUSES. ALL OF THE NUMBERS WERE WRONG. THE NUMBERS WERE LIKE FIVE HOURS BEHIND. PEOPLE WOULD GO DOWN TO FIND OUT WHAT WAS HAPPENING. IT WAS WILD.
>> WE HAVE TO FAST FORWARD TO TODAY BECAUSE AS YOU WERE LOOKING INTO THIS, I KNOW YOU SAW MANY PARALLELS. AND WE THINK ABOUT A BUBBLE, BUBBLES EVENTUALLY BURST. YOU LOOK AT WHAT'S HAPPENING WITH A.I. RIGHT NOW. AND YOU'VE SAID, HEY, THE WAY THAT A.I. IS BEING BOUGHT UP IN THESE COMPANIES, THERE'S BILLIONS IF NOT TRILLIONS AT STAKE, IT'S KIND OF MASKING WHAT MIGHT ACTUALLY BE GOING ON WITH THE ECONOMY. CAN YOU EXPLAIN?
>> THAT'S THE THING I WORRY ABOUT. RIGHT NOW THERE'S THIS VERY EXCITING THING HAPPENING WITH A.I. THERE'S AN EXCITING THING IN 1929 CALLED RADIO, AND PEOPLE WERE BUYING, RCA, THE WAY THEY BUY STOCK IN NVIDIA TODAY. THE THING I WORRY ABOUT IS THE BOOM CAN ONLY LAST SO LONG AND, YES, WE MAY HAVE A GREAT ARTIFICIAL INTELLIGENCE BOOM. I THINK THAT'S REAL. BUT THERE'S THE POSSIBILITY THAT WHEN LEVERAGE IS INVOLVED, THERE'S TOO MUCH MONEY BEING LOANED OUT TO MAKE ALL THIS HAPPEN, SOMETIMES THESE THINGS CAN COME TUMBLING DOWN AND THE QUESTION IS, CAN YOU GET ON AND OFF THE TRAIN IN TIME?
>> THERE WERE A LOT OF REFORMS, OF COURSE, AFTER THE STOCK MARKET CRASHED, THERE WERE REFORMS AFTER THE FINANCIAL CRISIS. THEY'RE SUPPOSED TO PROTECT ORDINARY MOM-AND-POP TYPE INVESTORS. WHERE DOES THAT STAND NOW? COULD THAT HAPPEN AGAIN?
>> I'M PRAYING THIS CAN'T HAPPEN TO THE DEGREE THAT IT HAPPENED. SO MANY BAD CHOICES WERE MADE AFTERWARDS. HOOVER MADE SOME TERRIBLE CHOICES BACK IN THE DAY. THE FEDERAL RESERVE MADE SOME VERY BAD CHOICES. BUT THERE ARE GUARDRAILS THAT ARE BEING TAKEN OFF RIGHT NOW THE SYSTEM, BECAUSE WE WANT -- EVERYBODY WANTS THE LOTTERY TICKET. EVERYBODY WANTS ACCESS TO MORE. AND SO THERE IS A LITTLE BIT OF A WORRY, I THINK, THAT THERE'S SOME 1929-ISH -- ISH -- THINGS HAPPENING. 1929, JUST TO TELL YOU A QUICK STORY, MY GRANDFATHER WAS 11 YEARS OLD AND WAS A MESSENGER BOY DOWN THERE DURING --
>> ON WALL STREET.
>> -- DURING THE CRASH. AND HE USED TO TELL A STORY ABOUT HOW HE ACTUALLY WATCHED SOMEBODY JUMP OUT OF A WINDOW AFTER THE CRASH, AND HE LIVED UNTIL HE WAS 91 YEARS OLD. NEVER BOUGHT A SHARE OF STOCK HIS WHOLE LIFE. HE PUT THE MONEY UNDER HIS MATTRESS. HE BOUGHT BONDS AND THAT WAS IT. AND IT CAN HAVE A REAL IMPACT. PSYCHOLOGICALLY THE MARKET CAN HAVE A REAL IMPACT ON THE ECONOMY.
>> IT IS ACTUALLY A REFLECTION OF HUMAN NATURE IN SO MANY WAYS, AND THAT IS BROUGHT TO BEAR IN THE BOOK. YOU