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Wall Street Today Echoes 1929, Warns Andrew Ross Sorkin

The acclaimed financial journalist cautions that speculation, growing debt, and deregulation are creating market conditions reminiscent of those that triggered the Great Depression.

Wall Street Today Echoes 1929, Warns Andrew Ross Sorkin

(Photo: SBR)

BY Donna Joseph

NEW YORK, Oct. 13, 2025 — Andrew Ross Sorkin has spent decades chronicling the highs and lows of financial markets. In his book Too Big to Fail, he detailed how unchecked risk and speculation can bring even the mightiest institutions to their knees. Today, he warns that Wall Street is repeating a familiar mistake, marked by the same risky optimism that preceded the 1929 crash.

The lessons from that era were harsh and unforgettable. Excessive speculation, soaring leverage, and a sense of invincibility led to the collapse that sparked the Great Depression. Andrew sees some of the same patterns today. While the context has changed, technology, AI, and global finance now dominate, the underlying psychology of risk and reward looks strikingly familiar. Investors appear convinced that prosperity is permanent, and innovation alone can shield them from loss. History suggests this mindset is dangerous.

Is the AI Boom Creating a New Bubble?

Artificial intelligence has become the center of market attention. Startups, established tech giants, and even traditional corporations are racing to integrate AI in every aspect of their business. While Andrew acknowledges the transformative potential of AI, he questions whether current valuations are sustainable.

The pattern mirrors the late 1920s, when investors poured money into any company connected to the latest technology without evaluating fundamentals. Then optimism collided with reality and markets collapsed. Today Andrew sees a similar dynamic as investors bet heavily on AI’s promise while often ignoring whether these ventures can deliver long-term value. He warns that progress is important but speculation without substance can be destructive.

The Erosion of Market Safeguards

Andrew also points to weakening regulations as a source of concern. After the 1929 crash, the U.S. established rules to protect investors and stabilize markets. Over time, however, many of those protections have been eroded. Deregulation, political pressure, and budget constraints have left institutions like the Securities and Exchange Commission and the Consumer Financial Protection Bureau struggling to keep pace with rapid financial innovation.

Without strong oversight, risky practices can flourish unchecked. Complex derivatives, algorithmic trading, and unregulated crypto products operate in an environment where safeguards are slow to adapt. Andrew warns that the removal of guardrails does not just affect large investors—it increases systemic risk across the entire financial system.

The Democratization of Risk

Easy Access Comes with Hidden Dangers: Technology has made investing more accessible than ever. Millions of new retail investors entered the market during the pandemic, attracted by low fees, social media hype, and the promise of fast gains. Andrew sees this as a double-edged sword. While democratization can empower investors, it also exposes them to high-risk products they may not fully understand.

Financial Innovation Creates Illusions of Safety: Andrew notes that financial innovation, while important, often creates an illusion of security. Stablecoins, private lending platforms, and high-yield crypto products promise returns that seem low-risk but hide significant vulnerabilities. Just as speculative trusts misled investors in the 1920s, these modern instruments can amplify losses when confidence falters.

Are We Facing a Correction or a Crisis?

Andrew does not claim a crash is imminent. Instead, he emphasizes that the same forces that led to the 1929 collapse, speculation, high leverage, and fading risk awareness, are visible again. Whether these factors trigger a short correction or a broader crisis depends on how investors, corporations, and regulators respond.

Markets often repeat patterns because human behavior repeats. Every generation convinces itself that this time is different. Sorkin’s point is that ignoring history is costly. Excess optimism and lax oversight rarely end well.

A Call for Balance

Andrew’s warning is a call for realism. Innovation should not be feared, but it should be tempered with prudence. Speculation fuels growth, but unchecked, it can bring markets to their knees. The past offers clear lessons: prosperity built on illusions is fragile.

The guardrails may be loosening, but they can still be reinforced. The question is whether the financial system will act now, before history repeats itself, or wait until the consequences become unavoidable.

It’s not that we're going off a cliff tomorrow. It's that there's speculation in the market today, there's an increasing amount of debt in the market today, and all of that's happening against the backdrop of the guardrails coming off.

 

Inputs from Diana Chou

Editing by David Ryder