The Day the Markets Roared

Legendary economist Dr. Henry Kaufman shares a classic Wall Street story that has never been fully told: a firsthand account of the day in August 1982 that would define US economics for decades

Dr. Henry Kaufman is a leading economist and Wall Street legend, renowned well beyond the financial industry. He was the subject of New Yorker cartoons, had cameos in drama productions and two seminal literary works of the 1980s, was subject to death threats, and enjoyed the nickname Dr. Doom. His pinnacle of influence arrived on August 17, 1982.

That single day turned out to be the beginning of the world that we now live in. At the time, after painful years of high interest rates and the inflation of the late 1960s and 1970s, consumers were paying 17 percent and higher to borrow money. But by the end of one summer day almost 40 years ago, the stock market had undergone its second-biggest rally since WWII, while bond prices soared and interest rates plunged. Dr. Kaufman himself had written a memo that sparked this tremendous boom-and it set the global markets on fire, marking the start of almost four decades of US economic growth.

The Day the Markets Roared answers the questions:

• Why did Dr. Kaufman break with his longstanding bearish views to make a momentous prediction that spurred blaring headlines everywhere from Brazil to Beijing?
• How could a private individual exercise such profound influence over global financial markets?
• How did we get to today's rock-bottom and even negative rates? And what is their continuing impact on the economy, our financial markets and our livelihoods?

The Day the Markets Roared is a firsthand, minute-by-minute account of one remarkable day in financial and economic history, with a rich cast of characters, from Salomon's John Gutfreund to interest rate guru Sydney Homer, to Dr. Kaufman's longtime friend, Fed Chairman Paul Volcker. Dr. Kaufman reflects on the lessons of the historic August 1982 episode, harkening back to a more optimistic moment in American history, and offering inspiration for better times ahead.
About the Author:

Dr. Henry Kaufman is the most famous economist Wall Street has ever seen. As senior partner, chief economist, and director of research at Salomon Brothers, then the most profitable investment bank in the world, his fame extended well beyond the financial industry and into popular culture. He was the subject of New Yorker cartoons, had cameos in Bonfire of the Vanities and Liar's Poker, two seminal literary works of the 1980s, was subject to death threats and featured in drama productions, and enjoyed the nickname Dr. Doom.

David B. Sicilia is associate professor in the department of history and Henry Kaufman Chair of Financial History at the Robert H. Smith School of Business. His research and teaching center on business, economic, and technology history, with a special emphasis on the history of capitalism and finance. He divides his teaching between the history department and the Smith School.