This short, engagingly written book is a welcome antidote to the unfortunate and even dangerous stock market euphoria of recent years. Galbraith, as usual, is accurate and fair. The only problem with the book is that is that it never dives below the surface. Galbraith, like many left-wing critics of capitalism, has a keen eye for interesting facts, but he has little if any theoretical sense of the basic economic principles involved in market euphorias. It is gross credit excess that is fueling the current stock market bubble. The obverse side of credit is debt, and that is precisely where the problem rises. As credit expands, debt expands with it, especially bad debt. Eventually, the bad debt leads to a crisis; if a sizeable amount of debt cancellation occurs, you get deflation and a crisis of epic proportions.
Galbraith paints a picture of the episodes of financial euphoria that allow one to see the seeds of the next bubble being planted. What Galbraith points out are the common themes of market bubbles. In the end, the same script is run as we hear that "this time is different" Although published in 1990, this reads like an epilogue to the tech/internet bubble of 1999-2000. The old saying goes that "what we learn from history is that we do not learn from history." Galbraith gives us the tools to learn from history. In an age of books like "Dow 36,000" and other mania induced work, this classic is a reality touchstone for all serious, sophisticated investors - individual and institutional alike. I would rate this book as a **********, but am limited to ***** (5 stars).
You heard it here first -- maybe not the specifics but the concept. A readable short introduction to past bubbles, this work was accessible and fun.
