Product Description

An insightful look at how to succeed by going against the crowd

Collectively, people think and act in ways that are different from how they think and act as individuals. Understanding these differences, says William (Bill) Bonner-a longtime maverick observer of the financial world and the vagaries of the investing public-is vital to preserving your wealth and personal dignity. From the witch-hunts of the early modern world to the war on terror, from dot-com mania to the real estate bubble, people have always been caught up in frauds, conceits, and wild guesses-often with devastating results. In Mobs, Messiahs, and Markets, Bonner and coauthor Lila Rajiva show groupthink at work in an improbable array of instances throughout history and reveal why swimming against the current pays.

• Shares the deeper secrets of investing and pushes you to question what this means for your financial well-being
• Explains why people so often abandon good sense and good behavior to "follow the crowd"
• Offers concrete advice on how you can avoid the "public spectacle" of modern finance

The authors' cautionary tale of bubble economies reveals how the gush of credit let loose by Alan Greenspan has wreaked havoc on our lives-but their thoughtful and always entertaining approach also offers some sound investing principles for avoiding the pitfalls of the public spectacle, thinking for yourself, and protecting your money, your sanity, and your soul.

Product Details

• Amazon Sales Rank: #55941 in Books
• Published on: 2007-08-31
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 432 pages

Review
"…extremely timely…irreverent but thought-provoking examination of the goings on in international finance today… packs a serious punch." (The Independent)

"To say that this book is skeptical or contrarian is like saying Warren Buffett has money....entertaining criticism of anything and everything...I read the full 400 pages in just a few days.."-Rob May at Business Pundit (Top 10 business site) http://www.businesspundit.com/50226711/mobs_messiahs_and_markets.php(Nov. 2007)

"Mobs, Messiahs, and Markets by William Bonner and Lila Rajiva is a fascinating work....downright hilarious...a serious look at an important phenomenon in the human condition."- Dr. Jonathan Dolhenty of the highly rated philosophy site, Radical Academy (Oct. 2007)

"a sharp-witted jaunt through the mass hysteria that’s defined markets and people through the ages" -Money Week (Sept. 2007)

"William Bonner and Lila Rajiva provide the answers in this exhilarating -- if somewhat depressing -- book. Although their insights will often make readers laugh out loud, they will also find themselves wriggling uncomfortably at the manifold idiocies of human behaviour." -The National Post, Canada (Nov. 07)

"Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay would be a better choice to begin. Without that context for this book, you'll find yourself gobbling caviar without knowing what it is." - Donald Mitchell, author of The 2000 Percent Solution, December 18, 2007

"A fascinating book," - Alan Caruba in Book Views, December, 2007

"Mobs, Messiahs, and Markets is a tragi-comedy, full of sharp observations, delivered with equally sharp wit. This book's dark and disturbing revelations could leave one depressed and disillusioned, were it not so damn funny." -- Abram Bergen at Blog Critics, December 31, 2007

From the Publisher
Comments in advance:

"The book strikes at the center of conventional wisdom. It is brilliant, deep, and fun to read."

-- Nassim Nicholas Taleb, author of the legendary international best-seller, "Fooled By Randomness" and "The Black Swan."

"Learn about Fed bubbles, and make Ben Bernanke unhappy: Read this book."

-- Lew Rockwell, President of The Ludwig von Mises Institute.

"Entertainingly and irreverently investigates the "do-gooders" and "world-improvers" who stir up mass hysterias, unjustified wars and financial crises, while at the same time it warns readers how to better protect themselves and their pocketbooks."

-- Congressman Ron Paul, Presidential Candidate.

"A classic for the student of the current period in history...If I had to name just one book investors should read, this is the one I would select."

--Dr. Marc Faber, editor of the maverick "Gloom Boom and Doom Report" and author of the Amazon best seller, "Tomorrow's Gold- Asia's Age of Discovery.

"As fun to read as it is thought-provoking," -- John Mauldin, author of the New York Times best seller, Bull's Eye Investing and editor of "Thoughts from the Frontline.

"A cock-eyed, frolicking hell of a read."

-- Dr. Mark Skousen, Professor of Economics and editor of The Worldly Philosophers.

"I laughed aloud, I learned, and I was even offended. Behind the crafty writing, the authors share the deeper secrets of investing and push us to question what we believe. "Think for yourself!" this book screams.

-- Steve Sjuggerud, editor of True Wealth, one of the world's most widely read investment letters.

From the Inside Flap

Collectively, people think and act in ways that are different from how they think and act as individuals. Understanding these differences, says William (Bill) Bonner—a longtime maverick observer of the financial world and the vagaries of the investing public—is vital to preserving your wealth and personal dignity. From the witch hunts of the early modern world to the war on terror, from the dot-com mania to the real estate bubble, people have always been caught up in frauds, conceits, and wild guesses—often with devastating results. In Mobs, Messiahs, and Markets, Bonner and coauthor Lila Rajiva show groupthink at work in an improbable array of instances throughout history and reveal why swimming against the current pays. They explain why people so often abandon good sense and good behavior to "follow the crowd" and show you how to avoid getting caught up in the public spectacles around you.

If an investor merely recognizes the way mob sentiment works, the authors point out, he is far ahead of most others. Ordinary people, for example, turn over billions of dollars' worth of their hard-earned money to brokers and mutual fund managers every day—immediate, tangible, personal money—believing that strangers will give them back even more. Whatever would make them think so?

Mobs, Messiahs, and Markets demonstrates that investors are in fact caught between a rock and a soft place—between the private world they can understand and master and the misleading public spectacle of the markets. "The further away you get from your investments, and the less you suffer the consequences if they go bad, the worse your performance will be," say Bonner and Rajiva. "That's why 'collective' investments like index-linked funds,mutual funds, hedge funds, insurance funds, and pension funds are usually so bad. The investors are too far from the facts—and the managers are too far from the consequences."

The authors' cautionary tale of the current bubble economy warns that the gush of credit let loose by Alan Greenspan is fraught with perils for the unwary—but their thoughtful and always entertaining approach also offers some sound investing principles for avoiding the pitfalls of the public spectacle, thinking for yourself, and protecting your money, your sanity, and your soul.

Customer Reviews

On "follow the crowd" syndrome!
Ever since Malcolm Gladwell wrote the "Tipping Point", group thinking and social epidemic has been a topic of interest , not only among the academics , but also among investors and entrepreneurs. The success of social networking websites and wikipedia are all can be traced all the way down to the so called "follow the crowd" syndrome.

But William Bonner and Lila Rajiva have come up the with a brilliant idea to explore the flip side of social epidemic and the ripple effects it has on those who simply follow the crowd.

Investors wanted to follow the stocks "Warren Buffett" was buying. Guess what? It was too late. Home buyers wanted to buy houses with a crowd. Guess what? Most of them were late in the game and over-paid. Every college undergrad thought an IT degree would be the best. Guess what? There were too many programmers, and not many civil engineers and nurses. A large group of investors thought every brick-and-mortar business could be replaced with a dot.com. Guess what? Companies like WebVan.com were able to convince venture capitalists that vegetables can be sold online!! Banks jumped on the sub-prime mortgage bandwagon. Guess what???

"Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics" is a welcome addition to this ever interesting topic of "follow the crowd" syndrome. What makes this book click is the witty presentation and the practical approach of the authors. Bonner and Rajiva have done a fantastic job of presenting the nuances of "public spectacle' in a manner that is light-hearted as well as thought provoking. They have done a truly amazing job of striking at the center of conventional wisdom to explain why swimming against the current pays rather than following the crowd.

Their best advice: "When the higher math and the greater greed come together, watch out below!"

Go read this book. It's funny, brilliant, thought provoking and often offensive, too!!

N.Sivakumar
Author of:
America Misunderstood: What a Second Bush Victory Meant to the Rest of the World

One part Economics, one part Politics, three parts Ego
At first glance, this book appears to be the antithesis of a favorite of mine, The Wisdom of Crowds by James Surowiecki-- the authors Bonner and Rajiva criticize the efficacy of mob rule and the intelligence of the group. Further in the read, however, it is clear that "Mobs" is not the antithesis of "Crowds", and actually agrees with one of the central principles of Surowieckis book, but has just a fraction of the scope, despite the great read that it is.

After bashing group-think, as a true Socratic would, in a methodical and convincing manner, the authors turn their focus on another popular American pastime of late--Bush bashing, then go on to describe the impending collapse of the entire world economy. It's evident that mobs are irrational and tend to do some regretful things (like killing a famous Athenian philosopher) and Bonner and Rajiva have no quarrel here, but to say that the negatives of group-think refutes "The Wisdom of the Crowds" is like saying Socrates wasn't wise because he asked more questions than gave answers. As Surowiecki explains, crowds are only more intelligent than their constituent parts if they are made up of independent thinkers, not mobs. Bonner and Rajiva would surely agree to that and do to an extent in their book.

After a bit of Bush bashing and anti-Iraq-war sentiment, the authors deflate the Che Guevera revolution succinctly. But George and Che are the minions of a larger-picture chess match, in which there is a larger antagonist--Alan Greenspan. The authors make the case against Greenspan's lowering of interest rates to try to stave off a recession as the creation of the "Mother of the Mother of All Bubbles". Among persistent insinuations of associations between Greenspan and Enron, charts revealing the current financial situation, and a great history of the last twenty years of world economics, Bonner and Rajiva make the case that the world economy is an enormous bubble about to burst. Unfortunately, they don't show how to capitalize on the current economic system.

"Mobs" is an entertaining read but the constant ridiculing can get fairly uncomfortable (the authors calls Friedman's The World Is Flat "suitable only for children...to sit on or club each other over the head with"). Though "Mobs" usually follows a harsh critique with great points, the authors should hope their critics aren't nearly as unjust as they.

It is an insightful, intriguing, and entertaining book, despite the flaws. Without the motif of antagonism, it would be a great book. As it is, however, "Mobs" is a great complement to the above mentioned books, but one would suffer if this was the only book he read.

Strips the Veneer and Exposes Reality
Mobs, Messiahs, and Markets provides insights that run counter to the propaganda spewed by the mainstream media. Thought-provoking and myth-challenging, it will delight those who value liberty. People who believe the government is "here to help you" or that the tooth fairy really does leave coins under your pillow won't like Mobs, Messiahs, and Markets. That's their problem.

Mobs, Messiahs, and Markets looks at how and why people do stupid things en masse. Understanding how mass manipulation works can help you avoid trotting off the cliff in a herd of lemmings, so this stuff is good to know. One of the tools of mass manipulation is the really big lie. Quite adroitly, Mobs, Messiahs, and Markets looks at specific lies and gives them a sound thrashing.

An example of a really big lie
Let's look at example of one such lie: Alan Greenspan did a great job as Chairman of the Federal Reserve. Anyone who has paid the slightest bit of attention to the economic data knows that's false. But prior to reading Mobs, Messiahs, and Markets, I thought he was just incompetent. The truth is far worse. The truth is that Alan Greenspan's collusion with the Clintons amounted to a theft of half our assets and half our income. He accomplished this theft by undermining our currency so much that the dollar lost half its value during his "reign of reverse gain."

Look around. Now, imagine someone barges into your home and burns half of everything you own--including half your home. While the flames are still roaring, they access your investments, retirement accounts, and any other liquid or not so liquid assets of yours and take half of those, as well. Just as the fire trucks roll up, your boss calls and tells you that from now on your wages will be 50% less--after taxes. How happy would you be about now? I have just described exactly what Greenspan did to middle class Americans and the poor.

Doesn't this make you wonder why he isn't in prison? If you steal only $1,000 and use the money to feed your kids, that's grand larceny. You go to jail, and the newspapers call you a felon. But if you steal trillions of dollars (not just billions) to abet the shenanigans of a few unscrupulous people who have wheedled their way into political office, you get an excellent pension and the newspapers call you The Maestro. Go figure. By the way, the threshold for grand larceny was $500 before Greenspan took over.

Witty
I personally don't enjoy the witty ripostes that permeate Mobs, Messiahs, and Markets, but the barbs are creative and many people will be amused. To me, the reality is farcical enough already.

What makes Mobs, Messiahs, and Markets valuable to me is how the authors use facts and logic to debunk frauds and delusions in a definitive manner. Mobs, Messiahs, and Markets should be required reading for anyone wishing to participate as a citizen. I also highly recommend it for anyone who has bills to pay.

Gold and central banking
As I read Mobs, Messiahs, and Markets, I kept nodding in approval. Yes, these folks have done their research. Then, I got to the last chapter and things suddenly changed. The last chapter promotes the tired old "gold as a defense" notion. Accepting that particular notion as reasonable requires suspending several laws of economics, commerce, and finance. And it requires ignoring a large body of long-established basic facts. While the rest of the book was insightful, this chapter bombed in the "fundamental understanding" department. If you are stuck on the gold notion, of course, you can cherry pick what you want to "prove" you are right.

Now that I've fired a shot at an otherwise excellent book, here's my explanation. A currency, to facilitate trade, cannot be fixed to a commodity. A currency must be flexible, because markets are always in flux. Fix our currency to gold, and our markets will misfire. Markets are complex interactions among multiple parties simultaneously, rather than one-for-one trades of my pig and your cow.

The "gold mentality" assumes a physical production model and the trading of physical objects whose value is clearly known among parties who know each other. But those assumptions don't fit our actual markets, which is why everyone went off the gold standard. The reality is that most of trade is for non-physical assets (an example being intellectual property), and that alone tells you a great deal if you think about it.

This is a book review and not a white paper, so I won't go into detail on the other problems with this model. But let's look at this one a bit closer. As you look at the variety of products that people pay for, you can see a specific order in which value is added and by which profits are made. At the bottom are raw materials, in the middle somewhere you have manufactured goods. The highest level of value, and thus of economic gain, is intellectual rather than physical. That's why, for example, jobs that use your brain pay far more than jobs that use your back. It's why, for example, an engineering firm like Black and Veatch always has job openings and why, for example, widget factories in China are laying people off. It's why, for example, Bill Gates is the richest man in the world, but not a single factory machine operator is even on the list of the top 100 million richest people. Do we really need to "debate" this?

So, why do the authors go down this path? The "gold solution" is a proposed cure for the debasement of our currency. That debasement comes in the form of inflation caused by our central bank, which can create money from thin air because we have a fiat money supply (the money has no intrinsic value). The authors compare central banking to central planning of manufacturing and agriculture (Soviet style), but that's a false comparison because a central bank isn't making anything. At least, it's not supposed to and therein lies the problem with our central bank.

The mission of a central bank should be to ensure the currency remains stable. To do that, it needs to expand and contract the money supply to maintain the value of the currency. Central bankers in the USA believe their mission is to serve politicians, not to be guardians of the currency. And that's the problem. The book gives an excellent explanation of how this political serving is done and the huge damage it does to individuals and the nation as a whole. But instead of connecting the dots at the end, the authors jump into an alternate universe.

Creating money out of thin air can't be helped. The Federal Reserve isn't the only entity that creates money. We all do it, all the time. When a business extends trade credit, guess what? It creates money. Ditto when you write a check, use a credit card, write an IOU, take out a loan, or buy tickets to the show. All of these activities contribute to our money supply, even if only in a transitory way. They are fluid, which is why they work. You could not tie them to a gold standard, even if you wanted to.

Tying a currency to any commodity is exactly the kind of central planning that the authors rail against. Instead of letting the market decide the value of the currency (with a central bank to guard against inflation), some central authority pegs it to an industrial metal (which doesn't guard against inflation, as history proves). Then the supply of that metal fluctuates to one rhythm while the general market fluctuates to another. This creates many wealth-inhibiting problems, which is why we don't do it anymore. If you want commerce (as we know it) to grind to a halt, put us on the gold standard. Watch the bread lines form, shortly thereafter.

Another tired and irrelevant cliché the authors use is "printing money." The printing of dollars (Federal Reserve Notes) contributes a statistically insignificant amount to the total money supply. If the FR decided to triple the number of FRNs printed over the next six months, I doubt we'd notice any difference in our economy. People and businesses rely primarily on electronic money, not paper notes, today. Look at your own finances as an example, and you'll see how little you actually use paper notes. Does anyone pay a mortgage with paper notes these days? Make a list....

When we create money out of thin air, the Federal Reserve should contract the money supply to keep the currency stable. What happens instead is the FR also creates money out of thin air--doing the exact opposite of what it is morally compelled to do.

Thus, the behavior of the Federal Reserve is like that of someone who throws a drowning man an anchor. Greenspan, instead of throwing us life preservers, tossed so many anchors at us that our currency lost half its value. Nice guy, huh? Buying gold won't stop that, and it won't protect you from that. The only peaceful means of getting that kind of theft stopped is to vote the bums out of office. Voting for anyone other than a Democrat or Republican would help, but if you vote only for candidates who speak of the problems this book exposes (yes, they are out there, and Ron Paul is one of them), you will be doing the most good.

The rest of the book
Now that I've addressed (at length) the part of the book that should be revised (the misinformation about gold), I have to say the rest of the book is spot on. It is no exaggeration to refer to our public policies as spectacles. Or worse. The way the authors address these spectacles is great, and they provide a badly-needed counterbalance to the lies and lunacy that people are inundated with.

The book has a fairly high page count, but it's a quick read. It's divided into six Parts.

Part One is titled "A Critique of Impure Reason" and contains three chapters. This presents a theme the book revisits throughout, and that is of the person who is determined to make the world a "better" place by making it conform to his/her delusions. Hitler was such a person--you can guess how this goes. The book takes shots at several incompetent and/or downright crazy people who have led one nation or another into an expensive debacle or even complete ruin. Some of the blunders were monumentally stupid. And as we see, monumental stupidity is a recurring theme in government.

The first chapter of Part Two talks about the witch hunts that we look back on as examples of hysteria today as in, "we would never do that." Don't be so sure. The second chapter talks about how the media inflame war rhetoric and create news rather than report it. That's one reason I don't read newspapers. I don't watch television, either, because I have a machine to wash my clothes and another to wash my dishes--I don't need one to wash my brain.

Part Three talks about the futility of war. I like the example of how France loses wars yet still is sovereign France. Winning or losing doesn't seem to matter. Germany lost two world wars, but what language do Germans speak today? Hint: Sie sprechen Deutsch?

Was any war ever worth its high cost? The authors ask why there was an American revolution. The people of India, Australia, and New Zealand were able to obtain their independence from the British Empire without firing a shot. If that doesn't make you pause....

A particularly enjoyable area in The Flattening the Globe (title of Part Four), is where the authors take on Thomas L. Friedman. This is the guy who wrote the whacked out "The Lexus and the Olive Tree" and actually got it published as nonfiction. Having read relatively smarter material on bathroom walls, I never made it past the first 20% or so of the book. I wonder to this day whether Friedman had suffered from repeated blows to the skull, or deliberately wrote that ode to stupidity as a practical joke. Bonner and Rajiva wrote counterarguments to Friedman's absurd assertions, to illustrate some interesting points. The explanations were quite entertaining, and in themselves justify buying the book.

To understand what a Bubble King is, read Part Five. Here's where we get a good expose on the lunacy of price runups, speculation posing as investing, national fiscal policy (such that it is), and other "suckers apply here" scams that snag millions of people who eagerly line up to be fleeced. The real kicker is Chapter 15, "The Mother of the Mother of All Bubbles." Here, we get an analysis of the most important financial topic relevant to today. Understanding it will prevent you from becoming just another donor to the ultra-wealthy. That's probably why you don't get to read about it in the mainstream media. Guess who owns the mainstream media?

The last chapter lurches suddenly into lala-land, as noted earlier. That's where the book is supposed to tell you how to survive the public spectacle in politics and finance, but doesn't. However, there's still the rest of the book to enjoy and learn from. The authors poke right through the veneer of deception that seems to cover most everything that's financial or political these days. And just being able to see the reality will help you avoid following a herd of lemmings over a cliff.

Reviewer's view on elections
One reason we get things like Alan Greenspan's massive theft is we don't have an elected government in this country. Hold on, now, and let me explain. We can look back on the "elections" of the past half century and see that no matter which side of the Demopublican Party is "elected," we still get insane levels of federal spending. And they fund that irresponsible behavior through a combination of currency devaluation (what Greenspan did to us), stealing from children not yet born, and levying a hidden national sales tax by jacking up the cost of capital through staggering levels of debt accumulation.

How do they get away with this? Through a clever combination of disinformation, red herrings, and blatant lies. They also use a clever "good cop, bad cop" routine to pretend before the voters that the "election" is a choice between the Democrats and the Republicans. Or, more accurately, it's a "good crook, bad crook" routine--about like choosing between the Crips and the Bloods. The outcome is as pre-arranged and orchestrated as an All Star Wrestling match.

The common wisdom (or lack thereof) is that unless you vote for Democrat or Republican, your vote doesn't count. This defies logic, because voting either way means you simply rubber stamp a decision made by some Demopublicans behind closed doors. In other words, you throw away your vote out of fear it might not count unless you do.

Meanwhile, the currency devaluation helps these thieves keep right on fooling most of the people all of the time. Read Mobs, Messiahs, and Markets. Then, decide if you still want to give these criminals your personal seal of approval at the polls.

Mobs, Messiahs, and Markets isn't about elections, but the information in it should help you decide what to do at election time. It should also help you decide what to do about choices in investing, asset protection, and other aspects of financial management. Just don't go out and buy gold out of fear the world is ending--whether you have it or not won't make any real difference, and there are far better strategies available.