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A Short History of Financial Euphoria

4.08  ·  Rating details ·  979 ratings  ·  89 reviews
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.
Paperback, 113 pages
Published July 1st 1994 by Penguin Books (first published January 1st 1990)
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Daniel Clausen
Aug 02, 2018 rated it it was amazing
This is the second book I've read in a short time about financial manias, and it's an important one. The book was written in the early 90s at a time when the junk bond bubble had collapsed.

The book is short, simple, and intelligent. It also comes from a sensible left-of-center perspective that I feel is both wise and sadly lacking into today's landscape. I don't know everything about Mr. Galbraith's financial view, but he seems Neo-Keynesian.

The central arguments of the book are these:
1) The
...more
Lainie
Feb 16, 2009 rated it really liked it
This is not my usual style of book. My accountant husband urged me to read it (after I failed to read another book of Galbraith's--The Great Crash, I believe it was). This book was short and a fast-paced read, essential if I'm going to read some non-fiction book about financial matters.

I flew through this book and it was a big eye-opener. I knew some of the history included but Galbraith lays out the similarities of various economic crises to show how (clichéd though it may sound) history
...more
Wej
Jan 08, 2020 rated it really liked it
The title says it all. Galbraith introduces the reader to the history of financial bubbles. Highly readable introduction to the topic, just enough to increase the appetite for more (e.g. books by Charles Mackay or Reinhart and Rogoff).

In this brief essay he describes the major financial crises: Tulipmania, John Law's scheme, South Sea Company, US railroad boom, 1929 crisis, and several 20th century moments of euphoria. The US takes the centre stage in the book as a place where many recent
...more
R.
Jun 18, 2018 rated it really liked it  ·  review of another edition
Bit unfair to rational choice theory, but it was a different time perhaps. It is interesting to note that Galbraith places the blame for speculative mania quite purely within crowd psychology rather than more institutional effects like easy credit, etc. Hope is an unbacked asset, and people get silly. Oh, and thought his discussion of the first two American central banks, regional politics, and the wildcat banks were quite interesting, but everything discussed is generally in passing; it is a ...more
Francisco
Jan 04, 2016 rated it really liked it
Shelves: investing
Short and sweet, witty, humorous, and yet informative. Galbraith shares his characterization of episodes of speculation, then gives the account of a dozen such episodes, from Holland's tulip mania to the crash of October 1987.

Some key ideas:

a) The average person believes that people of great wealth (or who manage great wealth) are rich because of their superior intellect. When the average person becomes richer during an euphoria, he also tends to believe that the new riches are the product of
...more
John
Jul 25, 2015 rated it liked it
Shelves: economics
Galbraith's reputation as an economist isn't what it once was. There are few takers these days for tomes such as American Capitalism, The New Industrial State, or Economics and the Public Purpose, although The Affluent Society retains a readership. But as a writer of popular, accesible economics, he is, in my view, up there with Bastiat. His The Great Crash of 1929 is an excellent bit of descriptive writing and this short book is another riff on its themes.

Are the causes of economic events such
...more
Ravi Abhyankar
Sep 09, 2014 rated it really liked it
Galbraith, John. A short history of financial euphoria, Whittle books (Viking), Viking Penguin, New York, 1993. Hardcover, 113 pages.
Rating: 7/10

Following a series of extraordinarily bad fiction books, it was a delight to turn to Galbraith, whom I had not read since my college days. A short history of financial euphoria can be read in two hours, it offers amusement as well as utility.

All of us regularly come across people who believe in earning 20-100% on stock markets, who genuinely believe the
...more
Chuck
Aug 25, 2010 rated it liked it
Déjà vu all over again. That seems to be the pattern of financial boom and bust. In this slender volume, John Kenneth Galbraith selectively traces episodes of speculative excess from the Tulipomania of the mid-17th century through the Crash of '87. Why don't we ever learn? Galbraith identifies several reasons. First, collective memories of financial debacles tend to be very short; therefore, each new generation of financial "wizards" can effectively start over with a blank slate. Second, each ...more
Laura (Kyahgirl)
This book was referenced several times in "Juggling Dynamite" so I thought I'd check it out. Galbraith's style reminds me of the intellectuals I was always tripping over at the University but he's quite readable. In fact, the book is pretty funny in a sarcastic, cutting kind of way.

Galbraith reviews the aspects of human nature and the economy that allow us to constantly go into boom and bust cycles. He starts around the time of "Tulipomania" in the 1600s and goes right up through the 20th
...more
Tirath
Jan 04, 2015 rated it really liked it
A simple, concise book on the euphoria of crowds.
And everytime it's the same thing - euphoria based on a mutated new event/ reality.
And the crowd catches the fever.

Wonder what this book would have said about the IT bubble
And about the Great Recession

This is a book to go to everytime prices or emotions become a little heady.
Francisco
Feb 15, 2016 rated it it was amazing  ·  review of another edition
Exceptional

The author provides an easy to understand explanation of some of history's most memorable bubble bursts. Something that must always be on the mind of the enterprising investor if he wishes to succeed.
Hariharan Ragunathan
Jun 08, 2015 rated it really liked it
From Tulipomania to the 1987 crash Galbraith shares the common themes of the various financial boom and bust cycles. A very short 100 page read but definitely some great negative history we must be aware and changes your view of financial markets.
Ferhan Siddiqui
Mar 31, 2016 rated it really liked it  ·  review of another edition
Shelves: read-nonfiction
A quick and informative (if not oversimplified) essay highlighting key moments of speculation in financial history and their inevitable reoccurance brought on by short term memory and extreme optimism. Definitely worth picking up.

"Those who forget the past are destined to repeat it"
Roger
Aug 11, 2009 rated it really liked it
Most recently updated 1993. Scary. Could have been written in July 2009. Brilliantly executed descriptions of euphorias(ae?) of the past.

Only short-coming is that it's very short on the prescriptive. Ends with a bit shrug of the shoulders.
Joyce Zhang
Oct 29, 2014 rated it liked it
Read this for my history extension essay and the blatant doneness gradually ceases to be subtle toward the end and that was my favourite part. I could almost hear the *sigh* emanating from its pages.

On a separate but related note. All economists I've read so far have sounded so, so annoyed?

Uros
May 06, 2015 rated it really liked it
Brilliant. A welcome reminder of brevity of financial memory and mass folly in finance.

Anyone taking part in financial markets should read this once a year.
Marilyn Pocius
Dec 29, 2015 rated it it was amazing
Must read for anybody who invests, gambles or cares about history. Truth is stranger than any fiction.
Robert Rigoni
Short book, quick read but packed with a lot of wisdom.
Dina
Feb 03, 2015 rated it it was amazing
"Only two things are infinite, the universe and human stupidity, and I'm not sure about the former." - A.Einstein
Peter Bösenberg
Mar 30, 2016 rated it really liked it
i read the german translation - very poor translated, difficult to read in german
Robert Karl
Dec 02, 2015 rated it it was amazing
Short, witty, to-the-point. A whirlwind tour of some booms and crashes and one economist's take on the cause: irrational exuberance on the part of investors that happens over and over.
InvestingByTheBooks.com
Aug 21, 2018 rated it it was amazing
In 1954 the Canadian-born, Keynesian celebrity economist, serial author, academic enfant terrible and producer of timeless quotations - Ken Galbraith published his now classic The Great Crash of 1929. It’s never been out of print since. A Short History of Financial Euphoria is a compendious later day sequel, with a broader scope as it tries to establish a framework for how to analyze financial bubbles. It is a short, witty book with superb, sometimes cynical language. It’s a pleasure to read.The ...more
Mark
Jan 03, 2019 rated it it was amazing
Shelves: favorites, economics
Brilliant little book, or long essay, by perhaps the greatest economic mind of the late 20th century.

In summary: There is no true financial innovation, only variations on the theme of leverage, and the specious association, or perceived but nonexistent correlation, between money and intelligence contributes to speculative euphoria and programmed collapse. In fact, “having money may mean, as often in the past and frequently in the present, that the person is foolishly indifferent to legal
...more
Alejandro Alvarez
Feb 15, 2020 rated it it was amazing
Fantastic book! Super well written, with a lot of details of every single bubble that happened in our capitalism history. One of the things that I found quite impressive about this book was the style that Galbraith has to make deep questions of all of the big financial crisis that our humanity suffer. Like the way that people get irrational about the real value of things and start to pay for something that did not worth what they think it cost. Making it in a huge loss of wealth for every kind ...more
Will Bell
Oct 29, 2018 rated it liked it
Its not so much a bool, its an essay in bool form, but the blurb does confirm this. I do love JK Galbraiths melodious writing style, his eloquence and timbre make you not want to stop reading.

The book is as with most of his stuff, just too darn short, and its strange to say that as this is not a criticism often aimed at economics writers. His style is so engaging it leaves you wanting more, but the book fairly skirts over most of the interesting episodes it chronicles, never really getting into
...more
Kaloyan Roussev
Jul 21, 2017 rated it it was amazing
Shelves: business
A quick, witty, slightly sarcastic, entertaining and very informative big-picture view of the remarkably similar and predictable mistakes of collective human behavior that leads to, perpetuates, doesnt notice, and sufers market boom bust sequences.

Perhaps in this day and age, it is wise to ask ourselves how many of the described commonalities of all big financial euphorias apply to the present situation on the stock market and in the cryptocurrencies
Justin Lee
Oct 26, 2017 rated it really liked it
This is a short and sweet essay focusing on the cyclical nature of economics. Anything that goes up must come down - and this has been repeating over again in history. Although there have been correlating events of up-and-down in modern financial history, we tend to forget the results and consequences within 20 years. Every 20 years, there will always be that "new big thing" where masses will craze over. In hindsight, we find out this is merely a pattern of human behavior.
Vishal
Mar 23, 2019 rated it liked it  ·  review of another edition
Important history lessons

Difficult to read and follow the author at times. He uses long winding sentences and arcane words which can be easily put forth in a few words. However, the history lesson on financial euphoria is important for all students of the capital markets. Had the prose been simpler, would've rated 5 stars.
Abhishek Gupta
Apr 06, 2019 rated it it was amazing
No better title for the book and neither can it be explain various financial manias throughout history any better.

3 learnings:

1. Memory relating to matters of financial euphoria is short
2. Don't mistake moneybags to be financial wizards
3. Most important, financial innovation of any kind is leverage concealed in some manner or other.
Zhou Fang
Dec 09, 2018 rated it it was amazing
A wonderful quick read that can be finished in one sitting. John Kenneth Galbraith walks through a few of the better-known financial manias in history. He argues that financial memory is exceedingly short, rarely lasting more than 20 years. They take shape in largely the same ways:

1. A particular asset (tulips, homes, etc.) appreciates
2. People see other people who buy those assets making money
3. A new generation of financiers "invents" a few ways to finance those assets
4. The assets continue
...more
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John Kenneth Galbraith was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism and democratic socialism. His books on economic topics were bestsellers in the 1950s and 1960s. A prolific author, he produced four dozen books & over a 1000 articles on many subjects. Among his most famous works was his economics ...more
“All crisis have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment.” 2 likes
“The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. All financial innovation involves in one form or another, the creation of debt secured in greater or lesser adequacy by real assets.” 1 likes
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