The Fearful Rise of Markets
By John Authers
Reviewed by Adam Zoltowski
Issue 6 Winter 2010
Americans spend more on housing each year than any other sector of the economy. Our houses dictate our value to outsiders and communicate aesthetic tastes and values. It is no surprise then, that the housing market is the biggest and most fragile of all. In his book, The Fearful Rise of Markets, John Authers examines global bubbles and how they occur, offering ways to predict and even prevent them. Though the book is not specific to housing, it offers insights that would have been invaluable in the years leading up to the market failure of 2008.
Authers breaks down the book in easy to digest sections, each tackling a different issue within the overall market issue. He covers indexing, herd investment, junk bonds, and other financial pitfalls. The end of each chapter provides a bulleted summary of what was discussed, giving the reader a checklist of what he or she should be taking away from the content.
Though covering a lot of ground, Authers comes down on the side of arguing that all of our eggs are in one basket, causing simultaneous market failures. He claims that our economy has shifted too far in the direction of institutional investment as opposed to individual and that economic sectors and markets are too dependent on one another to survive should one fail. An example given is the housing market’s impact on automotive. Is it any coincidence that the big three of Detroit failed soon after the housing market fell apart? Though it seems like common sense, Authers lays out market connectivity in a way that is easy to understand for the uninitiated and curious, providing a solid framework from which to understand the problem.
As we move into a more tenuous state of economies, it is essential to understand the danger of reliance on individual bull markets for long- term prosperity and sustainability. As designers, we can help inform and create the right mix of economic markets for sustainable financial viability.