The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

We’re forever blowing bubbles

Alan Greenspan may say it is "very difficult to definitively identify a bubble until after the fact" but the study of bubbles is far older than he is. This year is the 150th anniversary of the classic text on manias, financial or otherwise: Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds.


Mackay's study of the South Sea Bubble of 1720 is particularly relevant to central bankers. During that mania, Mackay writes, "visions of boundless wealth floated before the eyes of the people", and half the nation turned stockjobbers. Exchange Alley, the lane near Lombard Street in the City of London where stockjobbers gathered, was at one point so full of citizens mad for South Sea Company shares that the price at one end of the lane was 10% higher than at the other.


Numerous unscrupulous schemes cashed in on investor credulity - one man, who would surely be a dot com entrepreneur were he alive today, set up a joint-stock company "for carrying on an undertaking of great advantage, but nobody to know what it is". Despite this slender prospectus, the man was able to sell 1,000 shares in five hours, making £2,000.



You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree