Review of the Book " Manias, Panics, and Crashes: a History of Financial Crises" 5th Edition by Kindleberger and Aliber

Introduction “Manias, Panics, and Crashes” was first published in 1978 and the current edition that I read is the 5th edition. It is a very good book with the recommendation from Professor Paul A. Samuelson, Nobel Laureate, Institute Professor Emeritus, Massachusetts Institute of Technology, “Sometime in the next five years you may kick yourself for not reading and re-reading Kindleberger’s Manias, Panics, and Crashes.” The book is written about the financial crisis happened since 1636 (The famous
Tulipomania) to 2005 including 2001 IT Bubble and this book is a very good bedside book for all finance and investment professionals.

Content of the Book The book is separated into 13 Chapters. Chapter 1 gave a summary of the whole book and mentioned the cases of the financial crisis happened in the history.

(a) The Dutch Tulip Bulb Bubble 1636,
(b) The South Sea Bubble 1720,
(c) The Mississippi Bubble 1720,
(d) The late 1920s stock price bubble 1927-29,
(e) The surge in bank loans to Mexico and other developing countries in 1970s,
(f) The bubble in real estate and stocks in Japan 1985-89,
(g) The 1985-89 bubble in real estate and stocks in Finland, Norway and Sweden,
(h) The bubble in real estate and stocks in Thailand, Malaysia, Indonesia and several other Asian countries 1992-97,
(i) The surge in foreign investment in Mexico 1990-93, and

(j) The bubble in over-the-counter stocks in the United States 1995-2000. These cases are being used as analysis cases. Chapter 2 talks about the inherited instability of the financial markets including opinions from generations of economists including Adam Smith, John Stuart Mill…. Chapter 3 analyzes the development of mania and the usual reasons of the build up of the bubble.

Chapter 4 analyzes the role of supply of money on the development of mania. It also mentions the difficulty in the management of the monetary mechanism. Chapter