212 J. Magnuson
showed the largest stock market increase over a single decade in the history of capitalism. Like the New Era of the 1920s, the stock market bubble was evidence of massively overtraded stocks, and like the market of the 1920s, the bubble was doomed to burst. As the likelihood of a crash became more evident, the hype became increasingly shrill. New Economy exaggeration reached its most intense moments with the publications of books such as DOW 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market, by James Glassman and Kevin Hassett. In 1999, Glassman and Hassett asserted that, “The stock market is a money machine…. The Dow should rise to 36,000 immediately, but to be realistic, we believe the rise will take some time, perhaps three to five years.”29 Glassman and Hasset were, of course, dead wrong and beginning in 2000, the stock market crashed with a resonance that could be heard around the world. Depending on when and how one takes the measurement, the total dollar value loss of the 2000–2001 stock market crash was somewhere between $6 and $8 trillion. It stands the largest crash of all time and overwhelmingly eclipsed the crash of 1929 which, measured in 1992 dollars, obliterated about $676.5 billion. Tech stocks listed in NASDAQ lost 60% of their value, other indexes showed a decline in value around 10–20%, and banks that lent on margin suffered huge losses.30 As the NASDAQ crash thundered downward, dot.com companies were wiped out. Panic selling ensued throughout the year 2000 and drove the index to as low as 800 in 2002. The pattern of the crash was not unlike those of previous crashes going back to the Tulip mania 400 years ago: speculative buying, expansion of credit to be used in speculation, irrational euphoria as the bubble soared, and the notion that no matter how high the price went, there would always be the “greater fool” to buy. Stocks of the 1990s were driven to sky-high levels with the same self-reinforcing feedback mechanism as were stocks of the 1920s. As the ubiquity of greed— always present in a capitalist economy—turned inevitably to an epidemic of panic, stocks were thrown overboard in a self-reinforcing downward spiral of collapsing prices, panic sell offs. Millions of workers lost their jobs in the aftermath, and as the economy plunged into a recession millions more saw the hemorrhaging of their pension funds
