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A Short History of Financial Euphoria (Penguin business) [Paperback]

John Kenneth Galbraith
4.4 out of 5 stars  See all reviews (51 customer reviews)

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Book Description

July 1, 1994 Penguin business
The world-renowned economist offers "dourly irreverent analyses of financial debacle from the tulip craze of the seventeenth century to the recent plague of junk bonds."—The Atlantic.

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Editorial Reviews

From Publishers Weekly

The renowned Harvard economist examines reckless speculative episodes in American financial history.
Copyright 1994 Reed Business Information, Inc.

From Library Journal

No matter what your political leanings or economic beliefs might be, there is no denying that Galbraith is a brilliant writer. In this humorous and thoughtful book, he traces the investor "herd" mentality from Tulipomania, which gripped Holland in the 1630s, through a variety of events and up through the 1987 stock market debacle--which he accurately predicted. Galbraith analyzes the crashes that resulted from these speculative episodes, and he points out that the "mass escape from sanity by people in pursuit of profit," which, in his opinion, is always the cause, is never blamed. A truly excellent book, this is highly recommended.
- C. Christopher Pavek, Putnam, Hayes & Bartlett, Inc. Information Ctr., Washington, D.C.
Copyright 1993 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.

Product Details

  • Series: Penguin business
  • Paperback: 128 pages
  • Publisher: Penguin Books; Reprint edition (July 1, 1994)
  • Language: English
  • ISBN-10: 0140238565
  • ISBN-13: 978-0140238563
  • Product Dimensions: 5.2 x 0.4 x 7.8 inches
  • Shipping Weight: 3.2 ounces (View shipping rates and policies)
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (51 customer reviews)
  • Amazon Best Sellers Rank: #251,655 in Books (See Top 100 in Books)

More About the Author

John Kenneth Galbraith who was born in 1908, is the Paul M. Warburg Professor of Economics Emeritus at Harvard University and a past president of the American Academy of Arts and Letters. He is the distinguished author of thirty-one books spanning three decades, including The Affluent Society, The Good Society, and The Great Crash. He has been awarded honorary degrees from Harvard, Oxford, the University of Paris, and Moscow University, and in 1997 he was inducted into the Order of Canada and received the Robert F. Kennedy Book Award for Lifetime Achievement. In 2000, at a White House ceremony, he was given the Presidential Medal of Freedom. He lives in Cambridge, Massachusetts.

Customer Reviews

Most Helpful Customer Reviews
49 of 50 people found the following review helpful
5.0 out of 5 stars Bubble Story July 1, 2001
Format:Paperback
IN THIS SMALL but witty and well-crafted book, Galbraith chronicles the major speculative episodes, from the seventeenth-century tulipmania to the junk-bond follies of the eighties. The book was first published in 1990 and thus the recent dotcom-bubble burst is not covered. Nevertheless, the Harvard professor's book is still worth reading. A reason is that he claims to have identified common patterns in the history of financial euphoria. `In small ways the history of the great speculative boom and its aftermath does change. Much, much more remains the same', he predicts.
The perennial features are these. Some seemingly new and desirable artifact or development captures the financial imagination of a large number of people (say, group 1). The arrival of tulips in Western Europe, gold in Louisiana, the advent of joint-stock companies (corporations), real estate in Florida, or the economic designs of Reagan are all examples. The price of the object of speculation goes up. The object when bought today is worth more tomorrow. This attracts new buyers and assures a further price increase. Those in group 1 are persuaded that the new price-enhancing circumstance is under control, and expect the market to stay up and go up, perhaps indefinitely. The individual or institution that discovered the novelty (in group 2) is thought to be ahead of the mob. Fewer in number, individuals of group 2 perceive the speculative mood of the moment, try to get the maximum reward from the increase as it continues, and plan to be out before the eventual crash. The affluence of group 2 is wrongly associated, by group 1, with a miraculous financial genius. When something triggers the ultimate reversal, group 2 decides now is time to get out. Group 1 finds its illusion abruptly destroyed.
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20 of 21 people found the following review helpful
5.0 out of 5 stars A must read for intelligent investors April 9, 2002
By Duke
Format:Paperback|Verified Purchase
Galbraith paints a picture of the episodes of financial euphoria that allow one to see the seeds of the next bubble being planted. What Galbraith points out are the common themes of market bubbles. In the end, the same script is run as we hear that "this time is different" Although published in 1990, this reads like an epilogue to the tech/internet bubble of 1999-2000. The old saying goes that "what we learn from history is that we do not learn from history." Galbraith gives us the tools to learn from history. In an age of books like "Dow 36,000" and other mania induced work, this classic is a reality touchstone for all serious, sophisticated investors - individual and institutional alike. I would rate this book as a **********, but am limited to ***** (5 stars).
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15 of 15 people found the following review helpful
Format:Paperback|Verified Purchase
Galbraith's wonderful little book (Only 110 pages) is a quick guided tour -- with pithy analysis interspersed throughout -- of get-rich-quick movements, and, more importantly, the foolish thinking BEHIND such phenomena. Galbraith takes the reader on brief tours of some of the more notorious financial booms-gone-bad, such as the "Tulip Craze" in Holland and the Banque Royale bust in France in the 1600's, the South Seas "Bubble" of the 1700's, and, more importantly, the numerous episodes throughout American financial history, from Colonial times through the busts of 1819, 1837, 1857, 1873, 1907, 1929 -- and 1987 (Galbraith's book was first published in 1990 -- ten years before the dot-com bust....). The source of these rush-to-riches-gone-sour, argues Galbraith, rests on several ever-consistent, historically re-occurring causes: First, the quest for leverage (i.e. generating more funds than having the means to actually support them) and lavish debt spending; Second, the pathological, recurrent inability of the financial world to learn from the past; Third, the silly notion that the possession of wealth is directly equal to a persons' intelligence (Wealthy individuals, contends Galbraith, are not rich because of brains, but more often through chance and circumstance -- a fact the public ignores at their own peril); Fourth, the incessant human desire to become affluent by the easiest means possible; Fifth, the 'religious' quality Americans consistently perscribe to "the market," i.e. that free enterprise is 'perfect' -- Corruption, loss, and falling markets are due only to "outside forces" (Like 'evil CEO's' or 'government intervention') -- rather than the public's endless supply of gullibility, culpability, and simple greed. Read more ›
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8 of 8 people found the following review helpful
5.0 out of 5 stars critical thinking with a healthy dose of wit September 16, 1999
By Chris
Format:Paperback
Reading about the history of speculation is a way to broaden one's critical views of investing. Galbraith presents the material in an entertaining way and doesn't oversell the important points he makes about mass psychology and market reform. His self-deprecatory moments are very engaging indeed. I would go so far as to suggest that this book should be required reading for any investor.
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5 of 5 people found the following review helpful
4.0 out of 5 stars The capturing of the snark December 18, 2010
Format:Paperback|Verified Purchase
Money makes people stupid, but other people assume the possession of money means the pessessors are smart. There's a good deal of evidence for this proposition, which is repeated over and over in this essay, but in "A Short History of Financial Euphoria," John Galbraith was not interested in providing evidence. (You can find plenty in Edward Chancellor's "Devil Take the Hindmost.") Galbraith was just jeering.

Jeering is a worthy exercise, especially if the targets are the morons who run American and world finance. Galbraith has much fun tweaking the self-described geniuses (at Citibank, especially) for taking the deposits of the Arab sheiks after the oil shocks and handing them over to the deadbeats of Latin America. Even when he wrote this long essay, in 1990, most people had forgotten that.

The bankers certainly had, since they soon repeated it.

We are always being told that business should be given its head, but Galbraith is not too impressed. In his view (matched by my own experience as a news reporter covering business), most managers are more or less incompetent or stupid, and success in business is mostly a matter of luck.

The underlying message of "A Short History" is unsupervised markets fail.

Galbraith notes that when markets do fail, there is always a circling of the wagons to protect the myth of the market and to lay the blame on some exogenous event. This sometimes goes to absurd lengths. After the '29 crash, exculpators tried to say that it was foretold by a mild dip in industrial production in the summer; and more recently rightwing and free-market publicists have settled on blaming the Federal Reserve for a slight increase in the discount rate, avowedly meant to curb speculation, that year.
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Most Recent Customer Reviews
2.0 out of 5 stars Not sure what I got out of reading this, just another book.
If you have read about bubbles in history this book will not add anything. Reading free on the internet would be just as useful.
Published 22 days ago by 456Scotty
4.0 out of 5 stars Four Stars
The cover is a different one from what is shown
Published 1 month ago by Aneesha
5.0 out of 5 stars Five Stars
Brilliant and insightful as always! If only the rest of us could remember history so well.
Published 3 months ago by Paul D. Smith, Jr.
5.0 out of 5 stars excellent read
One of the best written books on financial dillusion. Galbraith captures the sense of urgency to invest in buffoonery with element poise.
Published 5 months ago by Zane C Keller
5.0 out of 5 stars Something for all to remember
A history that needs repeating over and over again. History probably always repeats itself in the financial world only modified by the new tools of the times.
Published 7 months ago by Peter Presel
5.0 out of 5 stars Others write about a given crisis, Galbraith explains the crisis habit
I loved this book, but if you're looking for specific details about a given crisis, such as the Great Depression, you're going to be disappointed. Read more
Published 7 months ago by John R. Holmes, Jr.
5.0 out of 5 stars Must read
An easy to read, must read, for any investor to understand irrational market behavior. The "random walk" must be viewed through the lens of "fear and greed".
Published 11 months ago by John Boyd
5.0 out of 5 stars Good read, informative.
This book was short and a fast-paced read and essential.

I flew through this book and it was a big eye-opener. Read more
Published 12 months ago by Don
4.0 out of 5 stars Interesting historical review
Concise review of the recurring patterns of financial folly, from the Dutch tulip mania to the booms of the 1980s.
Published 13 months ago by Kyrre
4.0 out of 5 stars GALBRAITH AT HIS SARDONIC BEST
A LITTLE BIT OUT OF DATE BUT STILL A PENETRATING ANALYSIS THAT HAS LESSONS FOR ALL TIME. HISTORY REPEATS ITSELF!
Published 15 months ago by John T. Hansen
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