Cover image for Famous first bubbles : the fundamentals of early manias
Title:
Famous first bubbles : the fundamentals of early manias
Author:
Garber, Peter M.
Personal Author:
Publication Information:
Cambridge, Mass. : MIT Press, [2000]

©2000
Physical Description:
xi, 163 pages : illustrations, map ; 21 cm
Language:
English
Personal Subject:
ISBN:
9780262072045
Format :
Book

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Library
Call Number
Material Type
Home Location
Status
Central Library HG6005 .G37 2000 Adult Non-Fiction Non-Fiction Area
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Summary

Summary

The jargon of economics and finance contains numerous colourful terms for market-asset prices at odds with any reasonable economic explanation. Examples include bubble, tulipmania, chain letter, Ponzi scheme, panic, crash, herding and irrational exuberance. Although such a term suggests that an event is inexplicably crowd-driven, what it really means, claims Peter Garber, is that we have grasped a near-empty explanation rather than expend the effort to understand the event.


Reviews 1

Choice Review

In this slender volume Garber (Brown Univ.) attempts to undo over a century of sloppy scholarship and myth surrounding three major speculative financial bubbles: the Dutch tulip mania (1634-37), the Mississippi bubble (1719-20), and the South Sea bubble (1720). These incidents, commonly cited when market instabilities arise in current times, often are taken as evidence of irrational economic behavior, misallocation of resources resulting from speculation, and a need for government regulation. Through careful analysis of market fundamentals, the author seeks to show that these 17th- and 18th-century events have been misrepresented. The Dutch tulip mania receives most of his attention. Garber traces the history of the flower's introduction into Europe, its propagation characteristics, the political and economic conditions of the period, and the rise and fall of bulb prices. The Mississippi and South Sea bubbles receive more succinct treatment. The author contends that investors' expectations in all three endeavors were based on reasonably sound market fundamentals given information available to them at the time. Only in hindsight can investors' judgment be deemed faulty. Therefore, in the author's view, bubble theories as explanations for unfavorable outcomes have no predictive value. Recommended for informed general readers and upper-division undergraduate through professional audiences. E. L. Whalen; Clark College


Table of Contents

Prefacep. ix
I The Bubble Interpretationp. 1
II The Tulipmania Legendp. 15
1 A Political and Economic Backgroundp. 19
2 The Traditional Image of Tulipmaniap. 25
3 Where Does the Tulipmania Legend Come From?p. 29
4 Establishment Attitudes toward Futures Markets and Short Selling: The Source of the Pamphletsp. 33
5 The Bubonic Plaguep. 37
6 The Broken Tulipp. 39
7 The Bulb Market, 1634-1637p. 43
8 Some Characterization of the Datap. 49
9 Post-Collapse Tulip Pricesp. 61
10 Bulb Prices in Later Centuriesp. 65
11 Was This Episode a "Tulipmania"?p. 75
III The Macro Bubblesp. 85
12 A Preliminary View: The Mississippi and South Sea Bubblesp. 87
13 John Law and the Fundamentals of the Mississippi and South Sea Bubblesp. 91
14 John Law's Finance Operationsp. 95
15 A Rehash of Mississippi Market Fundamentalsp. 105
16 Law's Shadow: The South Sea Bubblep. 109
17 South Sea Finance Operationsp. 115
18 Fundamentals of the South Sea Companyp. 121
19 Conclusionp. 123
Appendix 1 The Tulipmania in the Popular and Economics Literaturep. 127
Appendix 2 The Seventeenth-Century Tulip Price Datap. 133
Notesp. 145
Referencesp. 149
Indexp. 155

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