"Manias, Panics, and Crashes"

Paper Summary:

The paper offers a summary of ""Manias, Panics, and Crashes: A History of Financial Crises" by Charles P. Kindleberger, which is about the way that mismanagement of money and credit has led to financial crashes. The paper outlines the main ideas in the book's twelve chapters and then provides an in-depth analysis of this work. The paper also compares Kindleberger's views about the financial crisis to other economists' views and then concludes by showing how this book illustrates the pathology of the stock market, our economic system and the mentality of exploiting knowledge to turn a profit at another's expense.

Outline:
Summary
Analysis
Comparing of Author's Views about the Financial Crisis to Other Economists' Views
Conclusion

From the Paper:

"Kindleberger explains technically what that meaning is, and how it affects the financial markets. It is really just excessive expectation, according to Kindleberger. It is based on the herd mentality and the copycat mentality: we are very predictable and routine creatures: frankly speaking, if we see someone engaged in a behavior that makes them money, we will follow their behavior. Mania specifically is movement of cash or money into illiquid assets, with the prevailing hope that these illiquified assets will increase in value and grow faster than would have according to current interest rates of liquid assets. When the herd follows this mentality, then there is a disproportionate illiquidation of assets, of course all following the behavior of the individual who got rich through that particular form of illiquidation behavior thereof."

Sample of Sources Used:

• Bernstein, Peter (2000) Against the Gods and The Power of Gold New York: Wiley; 1 edition.
• Chancellor, Edward. (2000) Devil Take the Hindmost: A History of Financial Speculation. Plume New York.
• Kindleberger, Charles. (2005) Manias, Panics, and Crashes: A History of Financial Crises (Wiley Investment Classics) (Paperback) Wiley; New York.
• Minsky, Hyman. (2008) Stabilizing an Unstable Economy (Hardcover). McGraw-Hill; 1 edition.
• Mitchell, Edward, Chairman, Mitchell and Company; Founder, the 400 Year Project to Increase Global Improvements. (2008) Review by 20 Times: http://www.amazon.ca/review/R1K3L7QOHHAKMN

More papers on "Manias, Panics, and Crashes":

• Book Review # 113117 : "Manias, Panics and Crashes" by C. Kindleberger"
• Cause and Effect Essay # 116935 : "Investments, Markets and Crashes"
• Analytical Essay # 130659 : "Two Social Psychological Concepts and "Crash"

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