A Short History of Financial Euphoria

Galbraith's entertaining, wonderfully instructive cautionary essay should be required reading for investors. His focus is ``recurrent lapses into financial dementia,'' reckless speculative episodes fueled by greed, euphoria and investors' delusion that their temporary good fortune is due to their own superior financial acumen. The renowned Harvard economist chronicles a series of ``flights into mass insanity,'' from wild speculation in tulip bulbs in 17th-century Holland through the U.S. stock market crash of 1929, the 1980s mergers-and-acquistions mania and the savings and loan scandal. Comparing these crises, he finds recurring common features, such as evasion of hard realities, new financial instruments presumed to be of stunning novelty and debt that became dangerously out of scale in relation to the underlying means of payment. His proposed remedy is ``enhanced skepticism'' on the part of investors and the public. (June)