Financial Crises and Meltdowns

The burst of the housing bubble in the United States, which led to a global “credit crunch” beginning in 2007, followed a pattern of financial market crises and institutional meltdowns that has grown at an increasingly rapid rate during the past few hundred years. Every financial mania throughout history—from the Dutch tulip craze of the 1630s and the South Sea Bubble beginning in the 1710s to the Asian crisis of the 1990s and the dot-com crash of the early 2000s—has shown that most people subscribe to the belief that economic growth will go on forever, even though the record tells us otherwise. History also shows that people seem to be caught by surprise as boom turns to bust, as the euphoria over supposedly limitless growth ...