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The Ascent of Money: Blowing bubbles

submitted by rasch187

1 decade 4 years 8 months 3 weeks ago

Why do stock markets produce bubbles and busts? Professor Niall Ferguson goes back to the origins of the joint stock company in Amsterdam and Paris. He draws telling parallels between the current stock market crash and the 18th century Mississippi Bubble of Scottish financier John Law and the 2001 Enron bankruptcy. He shows why humans have a herd instinct when it comes to investment, and why no one can accurately predict when the bulls might stampede.

6 Comments

"the open hand of the free market cannot thrive without the closed fist of the military"

Good stuff.

Moving this video to rasch187's personal queue. It failed to receive enough votes to get sifted up to the front page within 2 days.

*promote

Self promoting this video and sending it back into the queue for one more try; last queued - promote requested by original submitter rasch187.

Interesting show. One minor nitpick about the summary: he doesn't "show why humans have a herd instinct when it comes to investment", he merely claims they do.

I do wonder if bubbles could be minimized by actually making the market transparent. Many politicians and economists claim to want to increase transparency, but little seems to come from it. I'd love to see an experiment to determine the effects of complete transparency of all publicly traded companies, i.e. any company that wanted to issue stock would have to make its books available to the public. Increased knowledge on the part of the buyers can only help the market work better.

I'd think this would give companies a hard push to profit by actually creating wealth rather than by creating the illusion of wealth via financial trickery.

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