“The crash blighted the fortunes of many hundreds of thousands of Americans. But among people of prominence, worse havoc was worked on reputations. In such circles, credit for wisdom, foresight, and unhappily also for common honesty, underwent a convulsive shrinkage.”
As in the aftermath of 1929, so in the wake of 2008. This was J.K.Galbraith, in The Great Crash 1929. He goes on to say that Goldman Sachs recovered its reputation relatively quickly, despite having been issuing dodgy investment trust securities at a rate of more than a quarter of a billion dollars less than a month just before the Crash. “It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity,” Galbraith wrote.
It took economists a while longer to rebuild their reputation, he added. “Harvard economics professors ceased forecasting the future and again donned their accustomed garb of humility.” I had the privilege of meeting Professor Galbraith when I was a PhD student at Harvard in the early 1980s, and I must say that ‘humble’ would not be the first adjective to come to mind to describe him. Still, his book on the 1929 Crash is a great read.