John Kenneth Galbraith, a Harvard Economics professor, wrote a fascinating book in 1990 entitled "A Short History of Financial Euphoria" detailing many of these phenomena. I would like to end this long-winded post with several quotes from this book that are deadly relevant to the current debt crisis. "There can be few fields of human endeavor in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.? "the investing public is fascinated and captured by the great financial mind. That fascination derives, in turn, from the feeling that, with so much money involved, the mental resources behind them cannot be less? Only after the speculative collapse does the truth emerge. What was thought to be unusual acuity turns out to be only a fortuitous and unfortunate association with the assets." "The rule is that financial operations do not lend themselves to innovation. What is recurrently so described and celebrated is, without exception, a small variation on an established design, one that owes its distinctive character to the aforementioned brevity of the financial memory. 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. " "All crises have involved debt that, in one fashion or another, has become dangerously out of scale in relation to the underlying means of payment." "Speculation buys up, in a very practical way, the intelligence of those involved." "the speculative episode always ends not with a whimper but with a bang."

— John Kenneth Galbraith  

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