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Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition Paperback – September 27, 2011

3.6 out of 5 stars 47 customer reviews

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Editorial Reviews

Review

'Underneath the hilarious anecdotes, the elegant epigrams, and the graceful turns of phrase, Kindleberger is deadly serious. The manner in which humans 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 The Power of Gold

'Deep knowledge and a pragmatic approach to financial history qualifies Robert Aliber to provide this desperately needed sixth edition of Charles Kindleberger's classic study of financial manias and crashes. It comes in the immediate aftermath of the biggest and most dangerous global financial crisis since the 1930s. But that, alas, was no isolated event. It was, instead, the culmination of four waves of crisis over 40 years. The latest crisis is most unlikely to be the last. It may even be the precursor of a still bigger crisis in the years ahead. Read. Learn. Weep.' -Martin Wolf, Financial Times

'Alas, both the need for a book such as Manias, Panics and Crashes, and the coverage of its material, keep on increasing, almost exponentially. So much has happened in the last few years that this is now Bob Aliber's book, as much as, perhaps more, than Charles Kindleberger's. Aliber has enhanced the prior high standards that Kindleberger set. This is an easily accessible book, filled with fascinating historical vignettes, and one that everyone from the experts to newcomers to the field should read and would profit greatly by doing so.' - Charles Goodhart, London School of Economics, UK

'Every so often financial markets fly off the rails of rationality. Manias, Panics and Crashes brilliantly explains these crises and warns us that as each one fades into the past, the lessons are eventually lost, and investors again come to believe that trees grow to the sky.' - David Laibson, Harvard University, USA

About the Author

Charles P. Kindleberger (1910 – 2003) was the Ford Professor of Economics at MIT for 33 years. He was a financial historian and prolific writer who has published 30 books.
 
Robert Aliber is Professor Emeritus of International Economics and Finance at the University of Chicago Graduate School of Business, where he has been a faculty member since 1965. His books include The New International Money Game, (Palgrave Macmillan) now in its seventh edition, as well as the book Your Money and Your Life.
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Product Details

  • Paperback: 368 pages
  • Publisher: Palgrave Macmillan; 6 edition (September 27, 2011)
  • Language: English
  • ISBN-10: 0230365353
  • ISBN-13: 978-0230365353
  • Product Dimensions: 5.9 x 0.9 x 9.2 inches
  • Shipping Weight: 1.2 pounds
  • Average Customer Review: 3.6 out of 5 stars  See all reviews (47 customer reviews)
  • Amazon Best Sellers Rank: #179,798 in Books (See Top 100 in Books)

Customer Reviews

Top Customer Reviews

By David Merkel on November 13, 2011
Format: Paperback
This is the first book that I have reviewed twice. I reviewed the third edition of the book previously, but I am reviewing the sixth edition now.

Kindleberger places the manias, panics, and crashes on a common grid, to see their similarities, In it he draws on a number of common factors:

* Loose monetary policy
* People chase the performance of the speculative asset
* Speculators make fixed commitments buying the speculative asset
* The speculative asset's price gets bid up to the point where it costs money to hold the positions
* A shock hits the system, a default occurs, or monetary policy starts contracting
* The system unwinds, and the price of the speculative asset falls leading to
* Insolvencies with those that borrowed to finance the assets
* A lender of last resort appears to end the cycle

The advantage over the third edition is that you get to hear about the Asian crisis LTCM, the tech bubble, Madoff, and the present crisis (banking & housing, soon to be sovereigns).

The main point for readers is to beware when monetary policy is easy, banking regulation is lax, and many seem to favor buying the asset du jour, often with leverage. What is self-reinforcing on the way up will be self-reinforcing on the way down, but with greater speed and ferocity, as bad debts have to be liquidated.

Quibbles

Hindsight is 20-20. If the US Government had rescued Lehman, something else might have proven to be "too big to rescue," that the government might allow to fail, but miss the connectedness of the institution. I do think the US Government should have been a DIP lender to troubled firms, but not a buyer of equity.

Who would benefit from this book: Most investors would benefit from this book. It will make you more skeptical of assets that seems to be doing unnaturally well; it will also make you more skeptical about catching falling knives in the market.
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Format: Paperback
I vastly preferred Kindleberger's earlier version of this text. Aliber seemed to suck much of the vitality out of this book by removing Kindleberger's occasional jabs at monetarism, and making sure the general narrative referenced the evolving intermediate and graduate level theory. It was as if Aliber edited the original with an eye to making it more like a textbook. Dry, convoluted, and stripped of a coherent perspective. Take a pithy and insightful comment of 50 words, then add 100 more to kill it. Kindleberger did not provide a radical critique, but his earlier version at least opened to the door to recognizing some unsavory trends. Aliber shut that door. Boo, Aliber.
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Format: Paperback Verified Purchase
Now in its sixth edition, "Mania, Panics, and Crashes: A History of Financial Crises" was first published by Charles Kindleberger in 1978. How times have changed over those thirty plus years -- at least that is the striking conclusion from this latest iteration of the enduring classic, which argues that the world of financial crises began to take a very different shape just as the first volume was being written.

Consider this: according to the latest lead author, Robert Aliber (Kindleberge died in 2003), nearly all of the 10 greatest financial crises of all-time have occurred since 1978; the only ones that fall outside are the Dutch tulipmania of 1640, the South Sea and Mississippi bubbles of 1720, and the Latin American sovereign debt defaults of the 1970s, which fell right on the demarcation line. The original theme of this book was that all financial crises throughout history are the same and that they are a "hardy perennial." While the basic contours of a crisis (exogenous shock, euphoria, mania, distress, collapse, a pattern first laid out by Hyman Minsky) and the critical enabling element (loose credit) remain the same, the velocity, frequency and magnitude of these events is increasing. Reading this book in 2012 is the financial equivalent to watching "An Inconvenient Truth" - with the frightening overhang that the worse is likely yet to come.

The authors argue that things really began to change in the late 1960s and early 1970s. First, the US began to experience a sustained high rate of inflation (6% plus) for the first time ever in peacetime. Next came the breakdown of the Bretton Woods system, when the dollar went off the gold standard and free floating exchange rates were introduced, which dramatically increased the spread and volatility of world currencies.
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Format: Paperback
<Review of the 6th Edition>
Maybe not the definitive book on bubbles, speculation, and monetary expansion, but one can surely benefit from the knowledge obtained to avoid such casual financial distress to one's pocketbook. This 6th addition of Manics, Panics & Crashes is almost entirely re-written to include the relatively recent adventures and speculation in finance of the last 20 years. Beyond the exposé on the plethora of financial shenanigans over the last 300 years, a good amount of the text details the money flows during the old gold standard to assist in explaining causal reactions to the formation of bubbles and subsequent busts.

Surely many reading this review have experienced some effects described in the book, but nothing is really new as it has all been done before - just updated names for the same game (i.e. think Ponzi scheme). A worthy read for those interested in the history of financial shenanigans. However, the author's do assume you are aware of some of the classic Manics such as the Tulip Bubble and the Mississippi Company scheme. All in, is one is interested in financial history then this is an edition you would want to read.

The reader may be interested in Charles MacKay's classic "Extraordinary Popular Delusions and the Madness of Crowds" as a primer prior to reading this updated edition. As a side note, I was fortunate to read Extraordinary Popular Delusions nearly 20+ years ago and it saved me many headaches with the ability to spot several suspect adventures.

Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay

Of note: The typeset of Manias, Panics is a little tough and could have been a different font and 1/2 point larger. A little rough on older eyes.
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