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

Charles P. Kindleberger (Author), Robert Aliber (Author), Robert Solow (Foreword)

Book Description

Series: Wiley Investment Classics | Publication Date: October 4, 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 perspective. The updated fifth edition expands upon each chapter, and includes two new chapters focusing on significant financial crises of the last fifteen years.

Editorial Reviews

From the Back Cover

Finance

"Underneath the hilarious anecdotes, the elegant epigrams, and the graceful turns of phrase, Kindleberger is deadly serious. The manner in which human beings earn their livings is no laughing matter to him, especially when they attempt to do so at the expense of one another. As he so effectively demonstrates, manias, panics, and crashes are the consequence of an economic environment that cultivates cupidity, chicanery, and rapaciousness rather than a devout belief in the Golden Rule."
—from the Foreword to the Fourth Edition by Peter L. Bernstein,

author of Against the Gods and The Power of Gold

Praise for previous editions of Manias, Panics, and Crashes

"Classic...Manias, Panics, and Crashes is a durable guide to meditation: wise, witty, and practical. It is a template against which to measure the latest financial crisis—whatever and whenever that happens to be."
—David Warsh, The Boston Globe

"Definitive."
—Floyd Norris, The New York Times

"[Manias, Panics, and Crashes] is a scholarly account of the way that mismanagement of money and credit has led to financial explosions over the centuries."
—Richard Lambert, Financial Times

"What long has been the best history of financial pathologies is now even better. The reader who absorbs Kindleberger's lessons will be prepared to foresee and navigate the financial crises that surely lie ahead. Like a true classic, Manias, Panics, and Crashes is both timely and timeless."
—Richard Sylla, Kaufman Professor of Financial History

Stern School of Business, New York University

About the Author

Charles P. Kindleberger was the Ford Professor of Economics at MIT for thirty-three years. He is a financial historian and prolific writer who has published over thirty books. Manias, Panics, and Crashes is his most popular book.

ROBERT ALIBER is a Professor of International Economics and Finance at the University of Chicago Graduate School of Business, where he has been a faculty member since 1965.

Product Details

• Paperback: 355 pages
• Publisher: Wiley; 5 edition (October 4, 2005)
• Language: English
• ISBN-10: 0471467146
• ISBN-13: 978-0471467144
• Product Dimensions: 8.7 x 5.3 x 1 inches
• Shipping Weight: 15.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (33 customer reviews)
• Amazon Best Sellers Rank: #24,438 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

38 of 39 people found the following review helpful:

4.0 out of 5 stars Economic history, April 16, 2007

By 

Atherton Reader (Atherton, CA) - See all my reviews

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This review is from: Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics) (Paperback)

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.

50 of 54 people found the following review helpful:

3.0 out of 5 stars Relevant but hard to read, October 1, 2008

By 

Evelyn Uyemura (Torrance, CA USA) - See all my reviews
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This review is from: Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics) (Paperback)

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.

20 of 22 people found the following review helpful:

5.0 out of 5 stars A classic book on financial bubbles from an exceptional scholar, September 30, 2007

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Integrity Reviews (USA) - See all my reviews

This review is from: Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics) (Paperback)

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.