caprivenky Posted October 1, 2014 Share Posted October 1, 2014 [amazonsearch]A Short History of Financial Euphoria[/amazonsearch] [pre][/pre]just finished reading this . This is more of a large essay/monograph. Written in simple language Galbraith explains why speculative bubbles occur and will continue to happen.. The first edition was written in 1990 and predicts that future speculative episodes will recur. "But one thing is certain : there will be another of these episodes and yet more beyond .fools,as it has been long said,are indeed separated ,soon or eventually,from their money." Since this we had two speculative more bubbles in 1999-2000 and 2007-2008. In chapter2 - the common denominators Galbraith talks specific features of the speculative episode . All speculative events start from a "a new financial instruments or innovation or investment opportunity"-this always is some of debt or leverage creation against limited assets". Some of the financial innovation from previous episodes. 1 1920- great holding companies 2 1980- mergers and acquisitions 3 share buy backs 4 junk bonds 5 printing money The questions is "there a speculative bubble happening in the current market with high equity prices ". Is quantitative easing , low interest rates creating debt and excess leverage in the market -is this money Been used for stock buy backs , merger and acquisitions and boosting corporate profits to inflate equities . Is QE the new financial innovation(debt). Amazing book -every investor should read it Link to comment Share on other sites More sharing options...
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