32 / CHRONICLESnAnd when most of the antitakeovernprovisions were killed in conference,nthe market rallied from its lows. Portfolioninsurance, another programtrading-typengimmick, and massivenselling by mammoth overinvested mutualnfunds turned a greedy rout into anfull-scale financial panic. That panicnmay lead us directly to what Ravi Batrancalls The Great Depression of 1990nbecause the stock market crashed fromnwithin and without both. Speculationnand rampant insider trading corruptednthe market from within, and the nation’snoversize twin deficits weighed itnfrom the outside. The September ’87nFederal Reserve discount rate hike, thenfirst since ’84, and a big October rise innthe U.S. trade deficit also triggered thencrash. When financial irresponsibilitynbecomes a cultural fact of life, thengreed machine operates as much in thenpublic sector as the private.nDeep in public consciousness is thenlesson of the seven lean years thatnfollowed Joseph’s seven good ones.nThe public knows that rampant greednand endless borrowing cannot continuenindefinitely. That’s the truth whichnBatra confirms. He may be cycle crazy,nbut it’s our own fiscal irresponsibilitynwhich will make his historical determinismncome true. In spite of Batra’sneconomic mysticism, readers of hisnshort book get three important reminders.nFirst is the message that economicnups and downs are real. How manynAmericans under 35 would believenthat 5,000 people lived in tar-papernshanties in New York’s Central Park inn1933, much less remember what “AnShanty in Old Shanty Town” wasnabout, even if they’d been to Annie?nThe second message Batra makes plainnis that all the king’s men couldn’t helpnHumpty Dumpty. The Great Depressionnstarted less than 60 years ago, andnno group of economic advisors couldnstop it. So much for the safety nets wenhear about regularly. The U.S. can’tnprop up failed banks forever.nBatra’s third valid conclusion is thatnthe seeds of his predicted depressionnhave been sown. First comes the concentrationnof wealth resulting fromn”the richest 5 percent of Americansnhaving more income than the entirenbottom 40 percent.” Then “the concentrationnof wealth . . . increases thennumber of banks with shaky loans, andnfuels the speculative frenzy in whichneventually even the banking system isncaught. . . . Wealth inequality is a prerequisitenfor manias and bubbles. Thengreater the inequality, the bigger thenbubble and the more painful its eventualnbursting.” Finally, “a depression,nin a nutshell, is the result of a financialnpanic accompanying a recession.” Sonwhat will the government do? Here’snBatra’s answer: “This country has never,nin all its history, had an inflationaryndepression. Yet whenever business faltersnnowadays, the government’s firstnrecourse is to raise the budget deficitnand increase the growth of money. Wenhave been addicted to policies of easynmoney and credit for a long time andnare not likely to abandon them in thennear future.”nThe moral tenor of Batra’s jeremiadncan’t be refuted regardless of his data.nIf we’ve never had an inflationaryndepression, we also were never before andebtor nation with a budget so far outnof balance. All the never befores plusnthe Third World debt add up to globalneconomic crisis. We live in an economicnweb that’s no longer of our ownnmaking. The dollar affects trade andntrade affects inflation and production,nboth of which are tied to interest ratesnthat bring us back to the budget deficit,nand that means big taxes and foreignninvestment both, which gets us back tonthe dollar. Start anywhere you like,nthere’s no way out of the web exceptnharder times. That’s why the subtitle ofnAlfred Malabre’s Beyond Our Meansnis “How America’s Long Years ofnDebt, Deficits, and Reckless BorrowingnNow Threaten to Overwhelm Us”!nIf you read one book, read this one.nMark, Frantz, and Winans put faces onnmarket greed, while Batra makes clearnits connection to the current economicnnncrisis. Recessions are real, they run outnof control and become depressions,nand greed has taken us far down thenpath which makes that happen. ButnWall Street Journal economistnMalabre’s sermon might get us to donsomething about it. Malabre understandsnPresident Reagan’s failed economicngamble. The President believednthat tax cuts would create, via deficits,nthe political pressure to reduce governmentnspending. But the Reagan administrationnwasn’t able to get thenspending cuts it needed to balance thenbudget while cutting taxes and boostingndefense spending. “The Presidentntried to starve government to death,nbut all it did was get deeper in debt.”nGramm-Rudman was supposed to savenus from the deficit, but at the time ofnthe ’87 market crash. Congress was innfull flight from its automatic cuts. Insteadnwe acquired a deficit reductionnpackage that spends more than it raisesnin real money terms. Every tax increasenexempts as much as it takes in.nMondale went down on taxes, butnCongress can’t close the pork barrel.nCaught between a rock and a hardndeficit, government can only spendnand borrow. The more we do, accordingnto Malabre, the more certain thatnothers will do the trimming for us. Andnwe may not like the result.nMalabre’s short, well-written, andnnot at all sweet account tells us at oncenthat our tendency to live beyond ournmeans is rooted in debt. “Massively,ndebt permeates our economy at allnlevels — personal, corporate, and governmental.nThere is, unfortunately, noneconomic prescription to deal in annorderly fashion with the trouble thatnis emerging from our ingrainedntendencies — our determination — tonborrow too heavily, to insist on toonmuch pay for too little work, andnwhenever things don’t turn out, to looknto [highly wasteful] Washington forninstant relief” But there is a way out:n”It’s to spend less, save more, and worknharder.” The question is, does thennational will to do so exist? Here’snMalabre’s sad answer: “So far, there isnlittle if any evidence that it does.” Thendepression will do it instead. Moneynnovelist Paul Erdman followed ThenCrash of ’79 with The Panic of ’89.nReviewing that story in Barron’s,nMalabre guessed it would be followednin turn by The Collapse of ’99.n