Donald Rapp - Bubbles, Książki USA
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BUBBLES
,
BOOMS
,
AND BUSTS
The Rise and Fall of Financial Assets
Donald Rapp
BUBBLES, BOOMS, AND BUSTS
The Rise and Fall of Financial Assets
Copernicus Books
An Imprint of Springer Science
þ
Business Media
Dr. Donald Rapp
1445 Indiana Avenue
South Pasadena, CA, 91030
USA
drdrapp@earthlink.net
Springer Science
þ
Business Media, LLC # 2009
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or
transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher.
Published in the United States by Copernicus Books,
an imprint of Springer Science
þ
Business Media.
Copernicus Books
Springer Science
þ
Business Media
233 Spring Street
New York, NY 10013
www.springer.com
Library of Congress Control Number: 2008938905
Manufactured in the United States of America.
Printed on acid-free paper.
ISBN 978-0-387-87629-0
e-ISBN 978-0-387-87630-6
Preface
remember is: how to value assets? In response to that challenge, we
have invented the ‘‘free market economy’’ in which the price of an asset
is set by the give-and-take between buyer and seller, one seeking the lowest price,
and the other seeking the highest possible price. The two types of assets of greatest
consequence to most of us are real estate and corporate stocks. According to
classical economics, ‘‘the price is right’’ because it is set by negotiation between a
rational buyer and a rational seller as to the ‘‘worth’’ of the asset. Unfortunately,
history shows that at frequent intervals, this system gets seriously out of whack and
the pricing of assets goes haywire. Stock and real estate prices are driven to
‘‘irrational exuberance.’’ Inevitably, the bubble bursts and there is great misery
throughout the land. Then the cycle repeats itself – again and again.
What seems to happen is that some event, some expectation, or some devel-
opment starts the asset price rise rolling. As asset prices rise, a vacuum is generated
that sucks in more investors, hungry for quick profits. The momentum so gener-
ated attracts more investors. By now, most new investors ignore the original
stimulus for the boom, and are only buying with the intent of selling at a profit
to ‘‘a bigger fool’’ who is expected to come along soon. Greed descends upon the
land like a ground fog.
We have seen this process repeat itself with minor variations as far back as we
can remember,
1
whether in tulips in Holland in the 17th century, the South Seas
bubble of the 18th century, the Florida land boom of the 1920s, the stock market
1
Early booms and busts were discussed in: McKay, Charles (1841), Extraordinary Popular Delusions
and the Madness of Crowds. Richard Bentley, London. Reprinted Farrar, Strauss Giroux: New York:
1932
V
O
ne of the problems that has challenged us for as long as we can
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