Tuesday, October 13, 2009

A Short History of Financial Euphoria (Penguin business) by John Kenneth Galbraith - Classic Formula

World-renowned economist Galbraith, the bestselling author of The Affluent Society, reviews great speculative booms of the last three centuries, including the junk-bond follies of the 1980s. With wisdom and wit, he shows how the lessons of history can help us avoid financial calamity. Entertaining in its instructiveness.--The Boston Globe.

Classic Formula
This book is a must-read for understanding the current economic situation. The 1990s tech bubble, which turned into the housing bubble, was just a classic case of a financial bubble. In each case, they all thought they were smarter than previous generations, and that somehow the "New Economy" had changed the rules. The end result was always a financial depression that sometimes lasted for decades.

Rather than head scratching about "what happened", which is also a classic response to the bubble bursting, reading a bit of economic history shows that this is nothing new, and that our generation and our nation is not immune from typical human economic behavior.

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