The Good Bubble

Nobody, wise or unwise, knew or now knows when depressions are due or overdue.–JKG, The Great Crash 1929

I cozied round the fire with two books during the winter. Two books on The Great Depression. One, The Great Crash by John Kenneth Galbraith; the other, 1929: Inside the Greatest Crash in Wall Street History – and How It Shattered a Nation by Andrew Ross Sorkin.

The backdrop for anyone reading these books would probably be the same at most any point at time – a nagging feeling that the stock market is exuberantly closing in on a correction, or worse. And that our common days will see soup at least a little thinner.

The always-around-the corner feeling of nearing contagion is sharp just now, as 2025 saw a hellbent parade of investment in Generative AI, with promises but not proof of a big return. 

There must be some message to be learned in history, right? The radio stocks of the 1920s bear some likeness to AI, hyperscaler and data center equipment stocks of the 2020s. The era saw abundant borrowing on margin too, and a sudden army of retail stock traders. Does that augur anything now?

Let’s turn to Galbraith on that. The Harvard professor will disabuse the idea. He writes: “Nobody, wise or unwise, knew or now knows when depressions are due or overdue.”

While it has no seer’s solution to offer, The Great Crash remains a very worthwhile read, tho not easy sledding. 

It’s clearly quite full of wry observation, and I’d imagine it may have germinated in lighter moments in Galbraith’s economic classes. There it probably drew chuckles when the Great Depression itself was finally far behind. I did find the pace of facts plodding. But the pace was menacing too, as the reader knows where this is all headed.

Galbraith’s analysis of the events is subtle – it’s signaled by the authors sardonic winks and asides. 

When in the last chapter he asks “What then are plausible cause of the depression,” I say ‘finally!’ I was wondering! And not many of the causes seem less than relevant today.

Among The Great Crash’s concluding observations:

• The rewards for massive productivity gains, but the rewards were highly concentrated at the top.

• Bad corporate structure was replete - a labyrinth of holding companies and investment trusts controlled producing and servicing companies through leveraged debt.

• Thousands of small 'siloed' banks were caught in local panics, creating a national chain reaction.

That leaves room for a new book, no? I will continue by discussing Sorkin’s, but I will rely primarily on Jacob Weisberg’s recent NYRB review on “1929.” 

As Weisberg’s review [Tick,Tick …Boom! NYRB for Mar 26, 2026] emphasizes, Sorkin’s approach is quite different than Galbraith’s. Sorkin works to personalize the story, letting it unfold in day-by-day individual machinations of several key players in the Wall St crash – John Mitchell, Jesse Livermore, Thomas Lamont, John Raskob, or Washington figures like Senator Carter Glass and the immortal Herbert Hoover [The latter said in the review to be the genitor of the disastrous name: “depression.”

Sorkin’s 1929 is the type of carefully managed narrative non-fiction that came into being with Cornelius Ryan’s The Longest Day. It keeps things moving apace but also avoids leading conclusions. The dynamics of the event, Weisberg writes, prove difficult for Sorkin’s narrative method to capture. 

Yet, as tales of what can go wrong, both Sorkin’s and Galbraith’s works belong in the hands of readers today.

This is the NYRB, right? The topics are fair for the critic to riff on, as long as they mention the books. As said, the issues map pretty easily to today’s AI bubble.

Critic Weisberg intelligently inspects the notion – now heard widely, that bubbles, can be good. In the sprit of a Demosthenes he suggests this notion’s adherents have a material interest in convincing the world to pres on. He writes:

“Those who benefit from unsustainable economic trajectories Can be counted on to develop the justifications that make them feel warranted and to fight any government intervention that would cut the party short... That bubbles are good for us is only the newest spin on the old rationalizations we always hear.”

In the market for Good Bubbles, Weisberg is not a buyer. As he notes, today’s market makers do not even try to deny we are in an AI bubble. It could be a good thing, they say. And there are buyers for that too. The magic is in their confidence they themselves will not be without a chair when the music stops. 

For my part: I buy Weisberg’s take. The investor class behind the Gen AI push knows only its own purposes and doesn’t mind dragging the whole planet along for the ride, asking, what do I have to do today to put you in this bubble? -JV

Related
Tick,Tick …Boom! - NYRB - Mar 26, 2026
When will the AI doomsday hype machine lighten up, already? - medium.com/@jackivaughan – Jan 8, 2026