Tuesday, February 06, 2007
Something Else
Most of you have heard about the funny notion in China now that your luck in stocks will improve if you eat more beef. Well thank god I'm a beef lover already. We can laugh it off but weird things do happen when the temperature of the market gets past a certain degree. I've got a few more funny anetotes, of international flavor and across history, from a book* about past financial bubbles to share.
Early 18th century France - "gold mania" during Mississippi Company Bubble
MC was set up and given trading privileges by the French Government to pursue gold deposits presumed to exist in Louisiana of America (when there was no evidence of the gold). Shares were offered to the public who went crazy for it. The proceeds however went not to the search for gold but to the government for repaying its debt!
"So determined were some women purchasers that, in an interesting modern touch, they offered themselves for the right to buy shares." [I wonder how redemption and interest payment work?]
"To restore confidence and assure noteholders and investors that a goodly supply of [gold] would be forthcoming, a battalion of Paris [street beggars] were recruited, and the members were equipped with shovels and marched through the streets of Paris as though on the way to mine the [gold] in Louisiana. It was thought distressing when, in the next weeks, many of them were seen [in town] back to their old [selves]"
Early 18th century Britain - "concept company" mania during South Sea Company bubble
SSC ran a very similar theme to MC so I'll spare introduction. But it was the imitators who had outdone SSC founders in promoting companies with pure creativity and imagination. Some noble themes included:
"a company to build and market a typewriter - a company considerably ahead of its time." [it wasn't until more than 100 years later at 1868 when typewriters were invented]
"a project for a subtle machine gun that could fire both round and square bullets, depending on whether the enemy was a Christian or a Turk."
"a company to erect houses or hospitals for taking in and maintaining illegitimate children" [would they take mistresses too?]
"a company for carrying on an undertaking of great advantage, but nobody to know what it is [yet]" [this one sure sounds like the 'I have a dream' IPO campaign of Tom.com]
Early 20th century America - during Florida real estate boom
"beachfront lots could, by a flexible approach to [measurement], be 10 or 15 miles from the water."
"a subdivision said to be near Jacksonville was approximately 65 miles away." [we all know these well as we're told new properties anywhere in Hong Kong are all only 20 minutes away from Central]
Late 20th century Japan - beginning of end of Tokyo stock market boom where index dropped by nearly a quarter
"a leading investment house concerned with Japan reported that there was talk of changing the accounting rules, so that an institution that loses money in stocks can keep that fact confidential".
Early 21st century China - beef = bull???
* John Kenneth Galbraith, "A Short History of Financial Euphoria"
Early 18th century France - "gold mania" during Mississippi Company Bubble
MC was set up and given trading privileges by the French Government to pursue gold deposits presumed to exist in Louisiana of America (when there was no evidence of the gold). Shares were offered to the public who went crazy for it. The proceeds however went not to the search for gold but to the government for repaying its debt!
"So determined were some women purchasers that, in an interesting modern touch, they offered themselves for the right to buy shares." [I wonder how redemption and interest payment work?]
"To restore confidence and assure noteholders and investors that a goodly supply of [gold] would be forthcoming, a battalion of Paris [street beggars] were recruited, and the members were equipped with shovels and marched through the streets of Paris as though on the way to mine the [gold] in Louisiana. It was thought distressing when, in the next weeks, many of them were seen [in town] back to their old [selves]"
Early 18th century Britain - "concept company" mania during South Sea Company bubble
SSC ran a very similar theme to MC so I'll spare introduction. But it was the imitators who had outdone SSC founders in promoting companies with pure creativity and imagination. Some noble themes included:
"a company to build and market a typewriter - a company considerably ahead of its time." [it wasn't until more than 100 years later at 1868 when typewriters were invented]
"a project for a subtle machine gun that could fire both round and square bullets, depending on whether the enemy was a Christian or a Turk."
"a company to erect houses or hospitals for taking in and maintaining illegitimate children" [would they take mistresses too?]
"a company for carrying on an undertaking of great advantage, but nobody to know what it is [yet]" [this one sure sounds like the 'I have a dream' IPO campaign of Tom.com]
Early 20th century America - during Florida real estate boom
"beachfront lots could, by a flexible approach to [measurement], be 10 or 15 miles from the water."
"a subdivision said to be near Jacksonville was approximately 65 miles away." [we all know these well as we're told new properties anywhere in Hong Kong are all only 20 minutes away from Central]
Late 20th century Japan - beginning of end of Tokyo stock market boom where index dropped by nearly a quarter
"a leading investment house concerned with Japan reported that there was talk of changing the accounting rules, so that an institution that loses money in stocks can keep that fact confidential".
Early 21st century China - beef = bull???
* John Kenneth Galbraith, "A Short History of Financial Euphoria"
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