Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics) / Edition 5by Charles P. Kindleberger, Robert Aliber
Pub. Date: 08/26/2005
Manias, Panics, and Crashes, Fifth Edition is an engaging and entertaining account of the way that mismanagement of money and credit has led to financial explosions over the centuries. Covering such topics as the history and anatomy of crises, speculative manias, and the lender of last resort, this book puts the turbulence of the financial world in/i>
Manias, Panics, and Crashes, Fifth Edition is an engaging and entertaining account of the way that mismanagement of money and credit has led to financial explosions over the centuries. Covering such topics as the history and anatomy of crises, speculative manias, and the lender of last resort, this book puts the turbulence of the financial world in perspective. The updated fifth edition expands upon each chapter, and includes two new chapters focusing on significant financial crises of the last fifteen years.
Table of Contents
Foreword by Robert M. Solow.
1. Financial Crisis: A Hardy Perennial.
2. Anatomy of a Typical Crisis.
3. Speculative Manias.
4. Fueling them Flames: The Expansion of Credit.
5. The Critical Stage.
6. Euphoria and Economic Booms.
7. International Contagion.
8. Bubble Contagion: Tokyo to Bangkok to New York.
9. Frauds, Swindles, and the Credit Cycle.
10. Policy Responses: Letting It Burn Out, and Other Devices.
11. The Domestic Lender of Last Resort.
12. The International Lender of Last Resort.
13. The Lessons of History and the Most Tumultuous Decades.
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This book is extremely well written, however, the title is somewhat deceptive. Looking at the title, one would assume that the author probably takes you on a stroll through a chronological history of the primary financial world crises (at least at some point in the book). However, this is not how the book is written. Instead the book covers the panics in more of a topical method, which makes it hard for the novice in economics to get a lot out of this book. The author assumes that you know the basics about the major world crises and references them the way a senior college art text would jump around referring to different artists while making points about painting styles. I had hoped to learn a lot about the great financial crises in history, what caused them, and how the public and the governing bodies reacted to them. Instead, I felt like I got a lot of unrelated information thrown at me in a way I could not digest. Don't misunderstand me - if you already know a lot about the history of economics, you may get a lot out of the book. On the other hand, if you're looking for a historical primer on the subject - this probably isn't the right book for you.
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
This book goes through the economic history of our country. This book gets very wordy at times and goes into almost too much needless detail, but can be very informative. Kindleberger shows us that bad behavior can happen even now on the economic market, and that there is a definable parren to economic crises. Chapter one talks about how economic lows usually follow peaks in our economy. Chapter two discusses the patterns of a crisis. Chapter three compares crises and describe how they differ. Chapter four says that bad credit adds to the problems.Chapter five discusses those who help add to the problems of a crisis. Chapter six looks at the feelings of people as they make and lose money. Chapter seven deals with economies effects domestically and chapter eight internationally. Chapter nine talks about the good and bad of trying to let the problems fix themselves and chapter ten discusses the leaders of the economy. Although going into great detail, almost too much detail at times, it proves informative in the end. Three stars.