A Short History of Financial EuphoriaHow is it that, with all the financial know-how and experience of the wizards on Wall Street and elsewhere, the market still goes boom and bust? How come people are so willing to get caught up in the mania of speculation when history tells us that a collapse is almost sure to follow? In A Short History of Financial Euphoria, renowned economist John Kenneth Galbraith reviews, with insight and wit, the common features of the great speculative episodes of the last three centuries - the seventeenth-century craze in Western Europe for investing in an unusual commodity: the tulip; Britain's South Sea Bubble and the eighteenth century's fascination with the joint-stock company, now called the corporation; and, more recently, the discovery of leverage in the form of junk bonds. Along the way, Galbraith explains the newfangled types of debt that different generations have dreamt up, and he entertains with anecdotes about the ingenuity with which some of the more notorious charlatans have convinced people to invest in financial ciphers. Galbraith calls this book "a hymn of caution" for good reason. He warns that the time will come when the public hails yet another financial wizard. In that case, the reader will do well to remember the Galbraithian adage: "Financial genius is before the fall". The appearance of the next John Law, Robert Campeau, or Michael Milken may well be, after all, a harbinger of disaster. |
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aftermath American assets associated bank notes bankers Banque Royale became Bernard Cornfeld boom bulbs captured CHAPTER cial collapse Corporation crash debacle debt depression disaster Drexel Burnham Lambert earlier economic economist effect enterprises ernment error escape especially euphoric episode euphoric mood eventual FINANCIAL EUPHORIA financial instruments financial memory Florida genius gold Holland imagination increase individual inevitable inherent innovative institution intelligence investors Investors Overseas Services involved Irving Fisher issued John Law junk bonds land later leverage loans London Mackay mania ment mental Michael Milken Mississippi Company mutual funds nancial October once operations optimism panic payment perhaps persuaded predictable presumed purchases quotation Reagan real estate recurrent reward Robert Campeau securities seemed seemingly selling South Sea Bubble South Sea Company spec speculative episode speculative mood stock-market sustain thought tion tive trading Tulipomania tulips values Wall Street wonder York Stock Exchange