Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics) Reviews

• Much Improved 4th Edition of an Investment Classic

  
  By A1K1JW1C5CUSUZ on 2001-01-25
  If you are interested in how Alan Greenspan will probably handle the financial weakness that follows the year 2000 collapse of the Internet stocks, this book is a good guide. Chairman Greenspan is basically a follower of Professor Kindleberger. Both believe that pragmatic, flexible activism by the Federal Reserve can shorten up the pain from financial excesses.

  Those who are interested in the psychology of financial markets are often drawn to Professor Kindleberger's book after reading Charles MacKay's classic, Memoirs of Extraordinary Delusions and the Madness of Crowds. In this new edition, Professor Kindleberger has added useful perspectives on the Mexican and Asian financial crises of the 1990s and adjusted his interpretation to allow for more differentiation among crises than he did before. I found this edition by far the most satisfying of the four he has written.

  Professor Kindleberger is one of the few remaining literary economists, those who make their points in essays rather than through long equations that depend on questionable assumptions. This makes his work very accessible, even though it is as rigorous as it can possibly be while still remaining a popular work.

  If you believe in efficient markets or the overriding importance of macroeconomics, you will be angered and annoyed by this book. Milton Friedman and John Maynard Keynes each take their shots here, although in polite ways.

  As Peter L. Bernstein summarizes nicely in his introduction, Professor Kindleberger's argument boils down to four principles:

  (1) Irrational behavior does occur from time to time in financial markets.

  (2) There is a general, repeatable pattern in how this irrational behavior plays out (a positive economic displacement is followed by euphoria that takes the form of overtrading, then distress following revulsion, discredit by lenders in the overtraded assets, and then panic leading possibly to a crash brought on by those who bought high).

  (3) The economic system needs a lender of last resort to step in at the right time and in the right way to restore confidence and liquidity.

  (4) Trying to solve these problems by being doctrinaire is "wrong . . . and dangerous."

  Chapter one looks at how financial crises often accompany peaks in the economic cycle. Chapter two looks at the patterns of typical crises, described by "lumping" them together. Chapter three considers how speculative mania are begun by knowledgable insiders who then unload on overoptimistic outsiders who buy high and sell low. This chapter looks at how the crises differ from one another. Chapter four shows how either excess credit or too fast monetary expansion adds fuel to the flames. Chapter five considers the frequent association of swindles with these manias. Chapter six looks at the psychological stages of the whole process in more detail. Of central importance is the discomfort that many feel as they see a neighbor or friend become wealthy. Chapter seven looks at how the economic impact spreads to other domestic markets. Chapter eight looks at the transference to other international markets. Chapter nine looks at the pros and cons of trying to let these cycles take care of themselves. Chapter ten looks at the role of domestic lenders of last resort (the Federal Reserve in the U.S.). "How much? To whom? On what terms? When?" are the questions that require different answers each time in terms of who should get credit. In Chapter eleven, you see the special problems of the IMF. Will someone take the lead in time, or will everyone dally? The conclusion in Chapter twelve nicely summarizes the book. He argues tentatively that "a lender of last resort does shorten the business depression that follows the financial crisis." He also says there is "a presumption . . . that halting a cumulative deflation helps shorten the depression that follows."

  One issue that is not addressed in this edition is how such crises may occur more rapidly and with greater amplitude than before due to improved information flows. As a result, it will be more difficult for lenders of last resort to take correct action in a timely way. Clearly, "jawboning" such as talking about "irrational exuberance" will do little good.

  As we sort out the results from the crash of the "dot com" stocks, the groundwork is probably being laid for a fifth edition. How will you respond to the next mania that builds?

  Keep sight on rational values, even in times of irrational exuberance. For a deflation along with a credit squeeze will usually follow.
  
  

• Essential read for people concerned about their investments.

  
  By on 1999-01-01
  Few subjects in economics are as basic as financial crisis, yet in trying to explain them, one can be at a loss for words. Kindleberger's thoughts on the subject are summed up in this book in a way that few have chosen to follow. Instead of providing mathematical equations to try to explain the various crises that have arisen, he has chosen to explain his ideas in a more tangible method. This method involves interspersing his ideas with annecdotes and real life examples.

  To begin, Kindelberger takes the traditional thought that people are rational beings and introduces the fact that speculation leading to destabilization is very much present, and that many of history's crashes have come from this irrational behavior, ie manias and panics. To explain, one must first define what a mania is, what a panic is, and ultimately, what a crash is.

  According to Kindleberger, a mania is basically just excessive speculation in the market. It follows, as Kindleberger suggests, that if one observes someone else, ie a friend, who is making money through speculative investments, one tends to follow. Mania is movement from cash or money into illiquid real assets. As more and more people begin to investment on speculation, people that would normally be indifferent to this type of behavior decide to invest, it is called a mania. Also used interchangeabley with the term maina is the term "bubble". The use of the word "bubble" to explain this speculation foreshadows bursting. In this book, bubble refers to "an upward price movement over an extended range that then implodes. Extended negative bubbles, or periods of disinvestment are what are called crashes.

  Panics refer to the period after the mania has died down, and people are beginning to speculate in the opposite direction. As the maina was the upswing, the panic is the downswing. Panics are easily defined as the movement away from illiquid assets to money or cash.

  Crashes are sometimes thought to be the result of an extended period of panic. More often, a crash involves the collapse of prices or the failure of important firms or banks. However, financial crisis can result from one or the other or both, in no particular order. Kindelberger sites the crash of 1929 as an example. " The 1929 crash and panic in the New York stock market spread liquidation to other asset markets, such as commodities, and seized up credit to strike a hard blow at output." In spite of this Kindelberger explains that there was no money market panic as evidenced by the increase in interest rates.

  Informative and concise, Kindelberger is able to encompass more than three hundred years of financial crises in about 200 pages. In he majority of these cases, he asks the important question of whether or not there was a lender of last resort, and if not, would it have made a difference. A lender of last resort acts to halt a run out of illiquid assets into money by making more money available, through a discount window. The author goes into great detail of who has been the lender of last resort in past crises. For example in the various crises that affected France in the nineteenth century, The Bank of France has acted as lender of last resort. While in Prussia in 1763, the king acted as lender of last resort.

  From all of this, Kindelberger attempts to explain some of the lessons that all of the crises in the past have given us. Besides of the advantages of having a lender of last resort, he warns us that it is not the whole solution. Having a lender of last resort can pose its own problems. Many institutions, because there is someone to bail them out, partake in more risky practices. By simply bailing out these mismanaged firms, we are not giving them incentive to improve their operation.

  Manias, Panics, and Crashes is a well of information on the topic of financial crises. Kindelberger has made this book an easy read for the everyday person, not just economists. By avoiding the mathematics and jargon used in so many other economics books, he has produced a book that is necessary reading if one is contemplating in "playing the market." Manias, Panics and Crashes would be a wise investment for them as well as anyone curious in financial history . The old adage is true, those who do not know the past are condemmed to repeat it. By learning of others past mistakes we can more successfully navigate our own way.
  
  

• Excellent book, but not a good financial history

  
  By AI6QBE28VK8XA on 1999-11-12
  The subtitle (A History of Financial Crises) is misleading. This is an excellent book as far as dissecting manias and trying to understand them, but it is mainly that -- a study of how manias develop and turn into panics or crashes. The impression that I got is that Dr. Kindleberger assumes the reader already knows financial history. If history is more of what you're looking for, I highly recommend Edward Chancellor's "Devil Take the Hindmost". You can always come back to "Manias, Panics, and Crashes" later for a deeper study.
  
  

• Disappointing and non-useful

  
  By on 2003-02-25
  The subtitle of this book, "A History of Financial Crises", is misleading since the book is actually a *commentary* on the history of financial crises. As such, it assumes that the reader is already familiar with the history of financial crises from 1600 to the present. The book is organized by the phases of a financial crisis, resulting in a near-complete lack of chronological coherence. The author may typically be talking about the Dutch tulip mania of 1636 in one sentence and the panic of 1907 in the next sentence, a style which quickly becomes exasperating. The overall purpose of the book appears to be the promotion of a thesis favoring the concept of a "lender of last resort" in order to mitigate financial crises. Consequently the book reads like an academic treatise, which is basically what it is. This approach is, in this reviewer's opinion, self-indulgent on the part of the author who appears to be addressing a readership primarily in academia, government and perhaps a limited segment of the banking industry. This book is neither instructive nor useful for the general reader.
  
  

• Sorry amazon, I read the library's copy...

  
  By A2Y1PCZ8MBRI5A on 2000-05-05
  I'm puzzled by some of the negative comments about this book here, as I'm neither an economist nor a historian and I found the book quite accessible and interesting. The fairly predictable sequence of events leading to crashes, which have been played out many times in the past, is the book's central theme. Some of the story-telling could even be described as fascinating at times, though my knowledge of the subject was pretty much limited to what one learns of the famed `29 crash in high school american history.

  Anyway, the critics here are not entirely wrong, though I think they're being a bit nit-picky. I don't think the widely-read and educated lay-person should be scared off. I liked the book, learned something significant from it, was mildly entertained and impressed by the author's plethora of knowledge, and occasionally recommend it to those with an interest in financial markets, especially their so-called irrational side.
  
  

• Economic history
  By A1SYZVB8Y0J2AB on 2007-04-16
  History always has lessons to teach us. In addition to comments by Golden Lion from Utah, I believed this book really spoke poignantly about the "adjustment process" of global or local market imbalances and the possible causes.
  
  The causes are elaborated in many different examples from the Dutch Tulip crash to the dot-com crash. Signs of the excess liquidity, overly generous expectations of future demand, and other general characteristics are drawn from these events.
  
  In the economic case where A has caused B, then B has caused C, and so on. If Z is a market crash, one cannot blame Y for losses. The book writes that its the cumulative effects of A-Y that has caused this, and more likely the pin-prick that pops a "bubble" is normally from a totally unexcepted source. To me, this was the greatest take away point -- naturally after every market crash we attempt to learn from our follies. However, the market has also learned and adapted, such that the next market failure is caused by a different set, but the same symptoms are similar to A-Y.
  
  On the negative side, I wished that the latest version did a little better job at editing down the redundancies. For example, the Japanese real estate collapse in the early 1990's was used 5-7 times in different parts of the book -- in many cases, the underlying story was retold, even verbatim. I would disagree with one of the reviewers, that one needs an advanced degree to understand this book, however, an appreciation for economic theory is helpful, particularly monetary policies and capital markets. It does not require up-to-date knowledge of the stock, currencies, or bond markets.
  
  Nevertheless, a good book to keep and re-read every few years. Always worth remembering our past mistakes and trying to create an edge.
  
  
• Very Disappointing - a book only an "academic" could like.
  By on 1998-12-27
  Aparently Mr. Kindleberger has been cloistered in his "ivory tower" too long to write a book of interest and value to those who do not share his expertise. He expects the reader be intimately familiar with the details of a number of obscure events dating back to more than 350 years ago.

  For example, the author mentions, references, alludes to ... "the South Sea Bubble" at least fifty times(!!) in this book, Yet having read the text completely all I know about the famous South Sea Bubble is that it had something to do with speculation in a stock of the South Sea company, that it happened in England, and it occurred in 1720. The simple "Who, What, When, Where, Why and How" are never spelled out. Never. (Yes that simple and straightforward informantion is what I'd really hoped for, thus I wax bitterly.) If you feel you must read this book, first ask yourself if are familiar with all of the following :the south sea bubble, the missippi bubble, the london crisis of 1866, the new york crisis of 1907, the writings of Walter Bagehot, tulipmania (holland, 1600's), Bleichroder, ....... (this list could go on for pages). If "no" then reconsider your desire, as all the above are ASSUMED to be well known by the reader and such knowledge is essential to understanding the arguments and information presented.

  It is very scholarly - Plenty of obscure words and fully 50 pages of apendices and endnotes (!! in a 250 page book). But it is poorly written. And the endless "obscure name dropping and event referencing" failed in its intention to make the author appear profoundly knowledgable; I found it little better than irritating.

  I was very very very disappointed with this book. It was writen for those who have completed graduate work in "Financial History". If you haven't, you won't find this book readable or illuminating. I am a curious person who enjoys learing from books, but THIS was a painful read. The useful and significant infromation in this book could be very well presented in a concise, well written 20 pages. We all have better things to do with our time and money.

  D. J. Tarico, Ph.D.
  
  

• Relevant to today
  By on 1999-02-12
  This book is well written and quite relevant to todays World of finance. It describes various events from the past which have helped to shape our global economy and inadvertantly have created the institutions which regulate our market -although regulation is not dealt with herein.

  Kindleberger's history though is often difficult to read as it does not follow a chronological structure. Further he assumes that the reader has attained a certain level of knowledge as he seems to only make very brief mention of certain events.

  This book would have been far better if it was chronological and far more detailed. Still a great read with some interesting lessons from the dim, dark past of speculative manias ...???
  
  

• A chronicle of financial irrationality
  By A391X2D7CMPY8S on 2003-12-08
  Those who lost money in the 1990's stock market bubble may be tempted to think that they have been cursed with misfortune of unparalleled proportions. Reading "Manias, Panics, and Crashes" will surely change their mind. Bubbles, they will learn, are an enduring feature of financial markets, and generations of investors have fallen in the trap of buying very high to sell even higher, only to find that the frenzy cannot last for ever.

  The mania part of the story is familiar: a new invention will revolutionize the economic landscape and bring forth unimaginable profits. The abundance of credit, coupled with leverage (buying with borrowed money), accelerates this process and buying leads to more buying. Then comes the panic: some event shakes confidence and wakes up investors to the mania that has clouded their judgment. This panic leads to a crash: borrowed money needs to be repaid and investors will sell anything at any price to meet the bankers' needs.

  Charles Kindleberger has chronicled dozens of financial bubbles spanning more than four centuries. His historiography is impressive and the reader can often wonder how Kindleberger amassed such large amounts of data: his sources are primary and secondary, and they come from economics, history, politics, and even literature. The text is well written and the reader hardly notices that the ride covers centuries' worth of financial troubles.

  What, in the end, is Kindleberger's moral? Most cures for dealing with financial troubles, he writes, are no cures at all. Raising interest rates has not proven particularly useful and neither has continued warning from authorities that the investing public is inflating a bubble. The solution, he believes, lies in having a lender of last resort. The trick, of course, is to avoid moral hazard and prevent the public from gambling due to the reassurance of a lender of last resort. The answer is ambiguity: the lender can come in and save the day but investors should never be certain that help is forthcoming.

  In the end, "Manias, Panics, and Crashes" is a classic account of financial bubbles and its immense history and shrewd analysis will appeal to both the layman and the expert. And the book's message, that financial bubbles have to be met with an artful lender, should be taken at heart by those interested in the past and future of financial crises.
  
  

• A classic book on financial bubbles from an exceptional scholar
  By A354SO35K8ZMW3 on 2007-09-30
  Kindleberger was a professor of economics at MIT, and a deep scholar of the history of financial bubbles and subsequent crashes. He proves with many examples that growth in the supply of credit is a fundamental factor in bubble development, stengthening associations of this type categorized by Hyman Minsky. While Kindleberger's writing is sometimes redundant, his amazing grasp of the details of financial history, numerous examples, and deep understanding more than compensate for this minor limitation of style. This book has been through 5 editions and is an indispensable reference; it is also a fascinating read. It should not to be missed by any serious investor, nor any student of financial manias and panics.
  
  
• Little value added
  By on 2003-01-18
  The book is a mess where the author seems to try to show off all the names he learned reading history books. I would expect to find some descriptional or analytical value of financial crisis, but by page 60 I still haven't found any, and thought I should report this to you.

  So if you want 232 pages of.. "Bouvier's interest lies in whether Bontoux, a Catholic, failed of his own mistakes or was done in by a conspiracy of establishment Jewish and Protestant bankers resisiting an intruder. The subject lies outside our purview, but for the record, Bouvier issues a Scottish verdict of "not proven".", then this book is for you. There is another 44 pages of references to other books, newspapers etc for you to.. ehm, do nothing with.

  If you want to learn about financial crisis or recognize the next opportunities or pitfalls for your wallet this is not the book for you.
  
  

• Shows how much I know-- I really enjoyed it.
  By A30KEXFT9SILL6 on 2003-09-02
  I read it because so many of the books I was reading referred to it. Despite the negative reviews, I have to say that I found it neither dusty nor boring. Particularly given the last bubble that we have just been through, I found it fascinating to read his theories about what fuels a mania.
  
  Disclaimer: I can't even claim to be an armchair economist. Just an interested business bystander.
  
  If you get confused as to which financial crisis Kindleberger refers, use the appendix at the back. One flaw that the book really does have is to assume that you know all about the various events upon which it draws for its evidence. Perhaps for future editions it would be smart of the publisher to include a brief introductory chapter on the subject. While real economists would have no need for that introduction, the other readers of the book (and it does seem to be marketed at a wider audience) would benefit.
  
  Lots of great references to further reading included as well.
  
  
• Pretty boring - only the title and conclusion are useful
  By AJ8AQG2X9JJ2Y on 2003-07-30
  Actually a pretty boring book. The treatment is very academic, and the organization is divided into about 10 chapters (don't have it in front of me) which are supposed to be the general stages of a mania. each stage is covered in a chapter, answering questions such as "Who plays the role of the lender of last resort", or "What if there is no lender of last resort" (as in the great depression).
  
  The book would have been outstanding if it hadn't been wholly qualitative, allowing very few concrete conclusions to be drawn. Even the summary tables in the back covering dozens of manias were too short to be useful as a reference to anyone wondering about the current bubble. There was an excellent opportunity to pick one, two, or three "almost typical" manias (the author claims there is no "typical mania") and do a case study explanation of the manias to build reader understanding of the stages of a mania. This opportunity was lost. There was another really excellent opportunity to describe what changed about our economy in order to prevent a future mania of the same type from happening again, for each mania in the book. This opportunity was also lost.
  
  The irritating thing about this book is the writing style, e.g. "Who precipitated the crash ?? A run on banks from the king's decision to abandon the gold standard. Who was the lender of last resort? J.M. Hamemmacher but he ran short of cash after he mortgaged his farm". This terse academic writing style does not build understanding in the mind of the reader. The book is actually written more like an exercise on the part of the author who is trying to shoehorn each mania into a general model of a panic.
  
  To really get anything valuable out of the book you'd have to read all 200+ references and then you'd have a chance to check for yourself if what the author is saying makes sense. Mostly, since i don't know 17th, 18th, and 19th century economic history this book was very uninteresting to me.
  
  
• A must for your collection
  By A1JEM7WWCMZBL6 on 2004-12-17
  This book lays out the blueprint to spot a financial crisis in the making.
  
  A. Plenty of money in supply and preferably at cheap rates.
  
  B. A 'new technology'-from the birth of railroad stocks, to letter stocks of the 1960s and dot coms of the late 1990s.
  
  C. A willing and enthusiastic media outlet (think CNBC and the dot com boom).
  
  D. Cab drivers and plumbers suddenly trading actively in the respective markets. Another note I would throw in is when the investment community are saying 'it is different this time, simple valuation of securities is no longer possible'.
  
  Kindleberger's work draws on this scenario time and time again.
  
  A required reading for anyone actively trading in the markets.
  
  
• How money supply is expanded
  By A5WMBIOGE8Q6N on 2005-12-08
  The Monetarist need a central bank. Without a central bank availablity of money necessary too cover checks written was impossible to balance. Human behavior is impossible to predict. For example, maybe the consumer will leave his money in the bank or maybe, he would withdraw it. The fluctuation of money inventory can not be predicted: too much inventory is unprofitable and not enough inventory ondemand causes default on surrender issues. So, maintaining the sufficient level of funds available would be impossible because demand was impossible to predict.
  
  Monetary economics had two schools of thought "currency school" and "banking school". Currency school focused on profits from high interest yields. Banking school focused on a central bank. The banking school prevailed.
  
  The monetarist needed a way to manipulate the money supply. A private central bank called the Federal Reserve was formed in 1844 for the purposes of providing an unlimit source of credit.
  
  The Fed controls the money supply. Congress gave the Fed power to expand or contract the money supply. If the Fed wants to increase the amount of money in circulation, the Fed can simply print it. Printed bills are a small portion of the money supply. Today, there are at least nine forms of money.
  
  The most influencial way for the fed to increase the money supply is too buy government fixed-income securities. How does the Fed pay for these securities? They print money and buy the security. This is called inflation. Banks recognize this fact of inflation and raise interest rates. The Fed realizes the money supply has diluted and raises the overnight borrowing rate. Individuals and business recognize the money supply has become diluted, as prices increase and the dollar buys less. When the Fed buy the government securities,it puts money in the hands of the public banks; these banks turn around and fractionalize a portion of the money, as reserves, and loan out an 10 fold increase in loan money. The expansion of credit heats up the economy, growth surges, and job increase.
  
  To contract the money supply, the Fed does the opposite, it sells the government securities. The affect is too soak up liquidity, dry up credit, and contract the money supply. As money become tighter, interest rates rise matching demand for the scarce money, operation budgets tighten, and jobs decrease.
  
  The third function of a central bank was to ensure sufficient funds existed for customer requesting a surrender of funds the bank maintained. Fractional reserves needs a guarantee and the fed provided that guarantee against a money panic with its unlimited ability to print money.
  
  
• Poorly organized, poorly written
  By on 1999-11-08
  If you're looking for an interesting review of the panics and stock market crashes of the past, look elsewhere. This book reads as if a well-organized, concisely written history of panics was thrown into a blender and pieced together out-of-order.
  
  
• Great for Anyone and Everyone
  By A22LX6529JJ166 on 2002-07-29
  First off, I am an "average Joe" type of guy who is younger than the boomer generation. Learning and reading things like this is interesting although I don't read books like this a lot. But I do have two cents to give, like everyone else.

  I read this book from reviews and the fact that Alan Greenspan reads this author and apparently has been influenced by him. Dr. Kindleberger focuses on the most driving stimulant behind the market: human psychology. Price to earning ratios, earning reports, and numerous economic indicators are the rational guides, but once the major forces of the market--greed and fear--take root, they can cause momentous shifts in upwardly and downwardly directions quickly, or painstakingly slow and steadily. Mob or Crowd mentalities and the irrational forces behind them, are a recurring psychological and historical cyclical pattern according to Kindleberger, and he provides ample data to back this up. And, if one wants to do well in the market they can focus on picking when the gyrations will occur, choosing when to get in and when to get out.

  I often talk with two sets of boomers: those who "hopped on" in the 1990s and "got off" at the right times, or nearly at the right times. It is cyclical, cyclical, cyclical. They are the ones who have benefitted. I also speak a lot with boomers who didn't get out of the market in time, or even at all (as of July 2002). The results are significant and life-long. Lifestyles are permanently affected for the rest of ones life, both in positive and negative ways. And as Dr. Kindleberger notes, there will be another Mania that will come, and the opportune thing to do, is pick when to get on, and when to get off.

  Although what I am describing is very simplistic, the theme of the book is that natural patterns of behaviour are buying excessively (euphoria), and also rampant dumping (panic), which again, exceedingly sends the market in both directions. Baby Boomers that jumped on the stock-buying bandwagon in the 1990s, and didn't get out in time may not like this book. They may be reading it to try to figure out what's going on, and if one is to read this book they shouldn't assume the author will dumb it down with simple analogies, and dummy charts for laymen. It's not a simplistic Rick Edelman or Motley Fool type of book for the Boomer-come-lately, so stop complaining about the author's presentation.
  
  

• Kindleberger gets it right
  By A1XOHXMEF24XKV on 2004-08-02
  Fascinating and entertaining take on the history of boom/bust cycles in markets, that functions also as a reply to the monetarists of the Austrian school. The monetarists seem to see panics and crashes (such as those that heralded the beginning of the Great Depression) as the function solely of improper monetary policy by the central bank. Kindleberger, in my opinion correctly, realizes that while monetary policy may either enable speculation or exacerbate a panic, one must not ignore the behavioral psychology that grips the masses of investors once a mania has set in. He also sees a panic as the natural and inevitable consequence of an investment mania. It seems impossible to have a mania without a panic, as night follows day. Are you folks at the Fed listening? Pumping more air into the bubble through the current ultra easy money policy could well be simply setting us up for an even bigger set of problems down the road. Whether or not you agree with the author, he has written a very thoughtful and important book.
  
  
• Not for the armchair economist
  By A1MH9EQ1XLGHT on 2002-09-16
  Kindleberger dissects manias and panics to arrive at his conclusions. In the process, though, he bombards the reader with an abundance of detail and assumes a good understanding of university economics.

  A non-economist will have difficulty to follow his line of reasoning. For example: "A synthesis of Keynesianism and monetarism, such as the Hansen-Hicks IS-LM curves that bring together the investment-saving (IS) and liquidity-money (LM) relationships, remains incomplete, even when it brings in production and prices (as does the most up-to-date economic analysis) if it leaves out the instability of expectations, and credit and the role of the leveraged speculation in various assets".

  For those who enjoy thoughtful, dense reading, this book will make you a smarter investor. Unfortunately, for the large investing masses, those that have lost large sums in their 401k plans lately, the academic nature of this book puts this knowledge out of their reach.
  
  

• An elegant and informed look at markets
  By A2UPBB2U17JBJ1 on 2003-12-17
  Kindelberger's work is a classic study of speculative bubbles and their consequences, and should be read as such. From the first, this is a book that aims to seperate market moves from genuine crises - important in an age were there is a tendancy for the media to seek to dramatise the mundane in order to winn a BAFTA. The definitions provide a framework for examining the development of an irrational interlude in financial markets.

  Kindelberger's analysis is not, therefore, a classic "history" primer for the curious - there is no spoonfeeding of facts, for that is not what the book sets out to present. Instead, this is an elegant and informed look at what how financial markets have departed from the course theoretical "rational" behaviour suggests that they should have taken. For all that, it is still an accessible text to those who take a casual interest in financial markets.
  
  

• extremely valuable and informative, though incomplete
  By A2ZW67YJVWFY1E on 2004-05-02
  for the economist in me, i resent the fact that the author didn't include the relevant quant / charts of the macroecon factors that precipitated the various extreme situations he describes. having said that, this book does describe the aforementioned factors, as well as detailed accounts of precipitiating factors, outcomes and, sadly, reoccurrences.

  if one had read this book prior to 99, one would have profited from the nasdaq meltdown. ---if that's not an endorsement, i don't know what is.
  
  

• Overrated
  By A20I6HJ3TQPLIX on 2007-12-28
  Where are the "hilarious anecdotes, the elegant epigrams, and the graceful turns of phrase" promised on the back cover? There are valuable insights and ideas, but they are buried in more historical information than needed, and are somewhat disconnected and undeveloped. The material is not particularly well organized, and,like history, the author repeats himself a lot. The writing is awkward and difficult to read in places. However, I did pick up a good many insights and bits and pieces of historical information that are relevant to the current problems in the credit markets. History does repeat itself. Although I think this book is over-rated, if you are a patient reader and a serious student of financial markets, I would recommend it.
  
  
• Relevant but hard to read
  By A1157CR0T5UM9D on 2008-10-01
  I am no economist and just an interested general reader. I expected to read narratives about past financial crises and how they played out. But this book is not organized that way. It doesn't tell any story from start to finish. Instead it references lots of different crises in a kind of shorthand way, without giving the background or the overall narrative.
  
  Many of the references are pretty darn obscure, at least to me. So fine, if he's talking about how a certain phenomenon works and he says, "as in 1932," or "as in the S&L crisis," I'm with him. But when he says, "just as in the 1762 case in Belgium" (made up example)--well, my eyes start to glaze over, because he hasn't told me the story of 1762 Belgium, but referenced it as if it should be as familiar to me as the Great Depression in the US.
  
  I also think there's something wrong with the writing style. He seems not to start out with topic sentences that show us where he's going, or to end with a summing up of the significance of what he's just said. Certain details recur within a few pages of each other. The effect is pretty scatter-shot, as if it was not carefully edited and made to flow.
  
  There is plenty of raw material here for anyone watching our current economic crisis and wondering how it happened, but you have to work for it. What I get from it is that in certain circumstances, if everyone does what seems best to him or her in the market, the end result will be disaster for all. It's not really irrational to buy when prices are increasing by the day, because huge profits can indeed be made. But the more people that make that individually rational choice, the more irrational the whole thing becomes.
  
  Maybe I could compare it to a stampede to an exit door in a fire. Each person's individual best choice is to get out as quickly as possible. But if you allow that psychological reality to play out, you might have people trampled to death at the door who then block everyone else from escaping.
  
  Reading this was like listening to a rather elderly professor of history who is intimately familiar with many obscure incidents, but doesn't provide the context for his young students to follow his train of thought.
  
  
• Not a history - more of a survey
  By A24WRF40OT82UI on 2000-02-17
  Definitely NOT a "Popular" history. Very much a survey of the topic. Appears to me that there is an assumption that you are quite familiar with the events briefly alluded to in the discussion. Interesting concepts and fascinating historical glimpses. The details of the book's title will be found by reading the source notes and then going to the library to read the source documents.
  
  
• Only for serious economists
  By A2S5O4UXTTS7Z3 on 2000-02-28
  This book is definitely not for the arm-chair investor. Although the idea is very good, a thorough understanding of economics will be required to make this very factual book worthwile.
  
  
• Good book.
  By A37VMGCVNVU0X9 on 2001-03-16
  It shows u step by step to finanical crashes in history. It tells u what will happen in each stage toward the crashes.

  In the beginning, it says : "For historians each event is unique. Economics, however, maintains that forces in society and nature behave in repetitive ways.

  This is always true in 1929, ..., 1987, 1997, 2000, 2001 crashes.
  
  

• Superb treatment of the speculative nature of financial markets
  By A1UI9T8WKJPZN5 on 2005-09-29
  Kindleberger's book provides massive historical evidence to support his assessment of the boom-bust nature of financial markets.Basically,speculative excesses,financed in large part by margin account loans and easy bank credit,leads to a pattern where the debt load of many market participants is overleveraged.Like the straw that breaks the camel's back,all it takes is an exogenous(or endogenous) shock to pop the speculative bubble .The value of the underlying assets of the overleveraged market participants collapses.These individuals go bankrupt,causing a chain reaction as other participants are impacted by the bankruptcies and up bankrupt themselves.Kindleberger correctly identifies the major theorists of this outlook as I.Fisher(his debt-deflation theory)and H.Minsky(his financial fragility theory).There are a few small defects.First,Benoit Mandelbrot's nearly fifty years of statistical-empirical work on the "wild " risk inherent in all of the different financial markets worldwide would have provided a perfect fit with the historical and anecdotal evidence that Kindleberger has collected.Second,there is only a brief footnote on the role of exogenous "sunspot"uncertainty going on in this historical process.Kindleberger overlooks the technical analysis of the effect of uncertainty, in microscopic,decision theoretic terms,on decisions made by Keynes(Keynesian uncertainty)and Ellsberg(Ellsbergian ambiguity).The problem here is not necessarily irrational decision makers,but rational decision makers who lack sufficient relevant information to apply the standard neoclassical decision techniques.These decision makers KNOW that they don't know.They then decide to follow those whom they believe are better informed.This leads to crowd,herd,and cascade effects that both creates the bubble and the crash.One possible way to stop this recurring pattern would be to eliminate margin loans Third,Kindleberger appears to be unaware that Keynes would agree with most of Kindleberger's case.From Keynes's early 1910 lectures on the negative impacts of speculation on stock markets through the A Tract on Monetary Reform,A Treatise on Money,and the General Theory(chapters 12,17,and 22),one can find Kindleberger's points explicitly considered in Keynes's work.Of course,Keynes does not provide the vast historical evidence that Kindleberger provides.Keynes would likely argue that ,since his theory is a general theory of decision making under conditions of risk,uncertainty,and ignorance that applies where ever organized financial markets exist,he would already know what the historical record would show if examined in historical detail.
  
  
• A classic -- but showing its age
  By AO7OIZE8C5L4T on 2006-09-25
  This book probably deserves the title of "classic", being one of the first attempts by an economist to popularize for a broader audience a theory of speculative financial bubbles that takes into account "modern" macroeconomic theory (e.g. Keynes and the monetarists). The book identifies many common themes among some of the great financial manias in history, providing along the way some entertaining anecdotes and commentary.
  
  Nevertheless, classic or not, I was a bit disapointed with the book. After 30 years and several editions it seems to be showing its age, with numerous uneven and unconvincing attempts to update the text to the late 20th century. I also found that the many historical examples were not well told or clearly differentiated and tended to blend together. Chancellor's "Devil take the Hindmost" seems to do a better job at providing a history of the great speculative bubbles. Most importantly, Kindelberger writes alot about what goverbnments should do after crashes occur, but he does not help much with a useful framework for spotting bubbles as they emerge -- or understanding how they tend to unravel.
  
  
• Difficult Read, Need A Masters Degree
  By A32M002PIG7RPV on 2007-03-09
  Anything less than an honour student may have trouble. Fairly heavy reading, even for myself (B.Business Finance & Mathematics). Suited to Economics majors.
  
  
• A History of Financial Crises by Kindleberger
  By A1EDH8VJ7D1IYO on 2007-06-09
  This is heavy reading even for an academian, if I'm not mistaken. It goes on-and-on citing the details of finacial crises in history going back several centuries. There's no question that Mr Kindleberger's research is majestic. For any student that is exploring historical materials on finance, this book woould be a great source. One of the hardest part of this book is to sort out useable information for the average person that wants to be an alert investor.
  John Casey
  Northville, MI., 48167
  
  

• Devil Take the Hindmost: A History of Financial Speculation
• The Panic of 1907: Lessons Learned from the Market's Perfect Storm
• The Great Crash of 1929
• Extraordinary Popular Delusions and the Madness of Crowds
• The Black Swan: The Impact of the Highly Improbable