Are You Prepared for the Next Financial Crisis?

Manias, Panics, and Crashes: A Summary of Chapters 2-9

• Chapter 2 presents a stylized model of speculation, credit expansion, financial distress, and crisis that follows classical economic ideas of over-trading, revulsion, and discredit.

• Hyman Minsky's model of an unstable financial system prone to crisis has great explanatory power for earlier crises in the US and Western Europe, as well as real estate and securities surges in Japan and other countries.

• Chapter 3 explores whether markets in securities and real estate are always rational or whether speculation can be destabilizing, examining historical events that triggered manias.

• Financial liberalization or deregulation in Japan, Nordic countries, some Asian countries, Mexico, Russia, and Iceland has led to domestic monetary expansion and increased borrowing for speculative investment.

• Chapter 4 analyzes the monetary dimensions of manias and panics, noting occasions when a boom or panic was triggered by a monetary event and how innovations in finance can shock the system.

• Rapid increases in credit available to homeowners and real estate developers following the innovation of securitization and mortgage-backed securities contributed to the rapid expansion of the financial sector during real estate booms in the US, Britain, Ireland, and Iceland.

• Chapter 5 reviews the domestic aspects of a banking crisis, questioning whether official warnings can halt manias and discussing the turning point that ultimately produces a crisis.

• Chapter 6 discusses the impacts of a mania on domestic spending and resulting euphoria, including extravagant expenditures by individuals and countries building the tallest buildings in the world.

• Chapter 7 explores the discovery of frauds and swindles that developed in the froth of a mania, including personal and corporate frauds such as Bernie Madoff's Ponzi scheme and Enron's fraudulent practices.

• Chapter 8 covers the international contagion of manias and crises from the seventeenth to the first half of the twentieth century, examining competing narratives and possible linkages among countries.

• Chapter 9 highlights the four waves of banking crises since the early 1980s and the relationships among the successive waves, noting the systematic relationship between surges in credit and real estate prices in Mexico, Japan, Southeast Asia, and the US, Britain, Ireland, Iceland, and Spain.

• The likelihood that these four waves are independent and unrelated seems low, with a connection between the developing country debt crisis and the surge in property prices in Japan and a follow-on crisis in the debt of governments of Greece and other Mediterranean countries.Crises in the Financial World: Enron, MCIWorldCom, and the Euro

• Enron and MCIWorldCom used off-balance sheet financing and inflated prices to show increased profits, resulting in their collapse and the failure of Arthur Andersen.

• Investment banking firms paid $1.4 billion to forestall trials, and several individuals, including six Enron senior managers, went to jail.

• Martha Stewart was charged and imprisoned for obstruction of justice related to a share deal.

• Chapter 10 focuses on the real estate and banking crises in Ireland and Spain, as well as the sovereign debt crises in Greece and Portugal.

• Greece had negative economic growth for five consecutive years, a fiscal deficit of over 10% of its GDP, and a government debt to GDP ratio of 140%.

• The EU opposed Greece leaving the euro, resulting in domestic deflation and serial write-offs of government debt.

• Several other countries have high ratios of debt to GDP, preventing them from adopting more expansive fiscal and expenditure policies.

• The collapse of Enron led to the failure of Arthur Andersen, previously the most highly regarded global accounting firm.

• MCIWorldCom inflated profits by claiming expenses as investments, and Jack Grubman promoted their stock.

• Merrill Lynch paid $100 million to move the story about Henry Blodgett, a security analyst writing scathing emails about promoted firms, off the front pages.

• The chairman and CEO of the NYSE resigned after it was revealed he had a compensation package of over $150 million, and some firms being regulated served as directors of the exchange.

• Large US mutual funds allowed firms to trade on stale news.

Manias, Panics, and Crashes: A Summary of Chapters 2-9

• Chapter 2 presents a stylized model of speculation, credit expansion, financial distress, and crisis that follows classical economic ideas of over-trading, revulsion, and discredit.

• Hyman Minsky's model of an unstable financial system prone to crisis has great explanatory power for earlier crises in the US and Western Europe, as well as real estate and securities surges in Japan and other countries.

• Chapter 3 explores whether markets in securities and real estate are always rational or whether speculation can be destabilizing, examining historical events that triggered manias.

• Financial liberalization or deregulation in Japan, Nordic countries, some Asian countries, Mexico, Russia, and Iceland has led to domestic monetary expansion and increased borrowing for speculative investment.

• Chapter 4 analyzes the monetary dimensions of manias and panics, noting occasions when a boom or panic was triggered by a monetary event and how innovations in finance can shock the system.

• Rapid increases in credit available to homeowners and real estate developers following the innovation of securitization and mortgage-backed securities contributed to the rapid expansion of the financial sector during real estate booms in the US, Britain, Ireland, and Iceland.

• Chapter 5 reviews the domestic aspects of a banking crisis, questioning whether official warnings can halt manias and discussing the turning point that ultimately produces a crisis.

• Chapter 6 discusses the impacts of a mania on domestic spending and resulting euphoria, including extravagant expenditures by individuals and countries building the tallest buildings in the world.

• Chapter 7 explores the discovery of frauds and swindles that developed in the froth of a mania, including personal and corporate frauds such as Bernie Madoff's Ponzi scheme and Enron's fraudulent practices.

• Chapter 8 covers the international contagion of manias and crises from the seventeenth to the first half of the twentieth century, examining competing narratives and possible linkages among countries.

• Chapter 9 highlights the four waves of banking crises since the early 1980s and the relationships among the successive waves, noting the systematic relationship between surges in credit and real estate prices in Mexico, Japan, Southeast Asia, and the US, Britain, Ireland, Iceland, and Spain.

• The likelihood that these four waves are independent and unrelated seems low, with a connection between the developing country debt crisis and the surge in property prices in Japan and a follow-on crisis in the debt of governments of Greece and other Mediterranean countries.Crises in the Financial World: Enron, MCIWorldCom, and the Euro

• Enron and MCIWorldCom used off-balance sheet financing and inflated prices to show increased profits, resulting in their collapse and the failure of Arthur Andersen.

• Investment banking firms paid $1.4 billion to forestall trials, and several individuals, including six Enron senior managers, went to jail.

• Martha Stewart was charged and imprisoned for obstruction of justice related to a share deal.

• Chapter 10 focuses on the real estate and banking crises in Ireland and Spain, as well as the sovereign debt crises in Greece and Portugal.

• Greece had negative economic growth for five consecutive years, a fiscal deficit of over 10% of its GDP, and a government debt to GDP ratio of 140%.

• The EU opposed Greece leaving the euro, resulting in domestic deflation and serial write-offs of government debt.

• Several other countries have high ratios of debt to GDP, preventing them from adopting more expansive fiscal and expenditure policies.

• The collapse of Enron led to the failure of Arthur Andersen, previously the most highly regarded global accounting firm.

• MCIWorldCom inflated profits by claiming expenses as investments, and Jack Grubman promoted their stock.

• Merrill Lynch paid $100 million to move the story about Henry Blodgett, a security analyst writing scathing emails about promoted firms, off the front pages.

• The chairman and CEO of the NYSE resigned after it was revealed he had a compensation package of over $150 million, and some firms being regulated served as directors of the exchange.

• Large US mutual funds allowed firms to trade on stale news.

Manias, Panics, and Crashes: A Summary of Chapters 2-9

• Chapter 2 presents a stylized model of speculation, credit expansion, financial distress, and crisis that follows classical economic ideas of over-trading, revulsion, and discredit.

• Hyman Minsky's model of an unstable financial system prone to crisis has great explanatory power for earlier crises in the US and Western Europe, as well as real estate and securities surges in Japan and other countries.

• Chapter 3 explores whether markets in securities and real estate are always rational or whether speculation can be destabilizing, examining historical events that triggered manias.

• Financial liberalization or deregulation in Japan, Nordic countries, some Asian countries, Mexico, Russia, and Iceland has led to domestic monetary expansion and increased borrowing for speculative investment.

• Chapter 4 analyzes the monetary dimensions of manias and panics, noting occasions when a boom or panic was triggered by a monetary event and how innovations in finance can shock the system.

• Rapid increases in credit available to homeowners and real estate developers following the innovation of securitization and mortgage-backed securities contributed to the rapid expansion of the financial sector during real estate booms in the US, Britain, Ireland, and Iceland.

• Chapter 5 reviews the domestic aspects of a banking crisis, questioning whether official warnings can halt manias and discussing the turning point that ultimately produces a crisis.

• Chapter 6 discusses the impacts of a mania on domestic spending and resulting euphoria, including extravagant expenditures by individuals and countries building the tallest buildings in the world.

• Chapter 7 explores the discovery of frauds and swindles that developed in the froth of a mania, including personal and corporate frauds such as Bernie Madoff's Ponzi scheme and Enron's fraudulent practices.

• Chapter 8 covers the international contagion of manias and crises from the seventeenth to the first half of the twentieth century, examining competing narratives and possible linkages among countries.

• Chapter 9 highlights the four waves of banking crises since the early 1980s and the relationships among the successive waves, noting the systematic relationship between surges in credit and real estate prices in Mexico, Japan, Southeast Asia, and the US, Britain, Ireland, Iceland, and Spain.

• The likelihood that these four waves are independent and unrelated seems low, with a connection between the developing country debt crisis and the surge in property prices in Japan and a follow-on crisis in the debt of governments of Greece and other Mediterranean countries.Crises in the Financial World: Enron, MCIWorldCom, and the Euro

• Enron and MCIWorldCom used off-balance sheet financing and inflated prices to show increased profits, resulting in their collapse and the failure of Arthur Andersen.

• Investment banking firms paid $1.4 billion to forestall trials, and several individuals, including six Enron senior managers, went to jail.

• Martha Stewart was charged and imprisoned for obstruction of justice related to a share deal.

• Chapter 10 focuses on the real estate and banking crises in Ireland and Spain, as well as the sovereign debt crises in Greece and Portugal.

• Greece had negative economic growth for five consecutive years, a fiscal deficit of over 10% of its GDP, and a government debt to GDP ratio of 140%.

• The EU opposed Greece leaving the euro, resulting in domestic deflation and serial write-offs of government debt.

• Several other countries have high ratios of debt to GDP, preventing them from adopting more expansive fiscal and expenditure policies.

• The collapse of Enron led to the failure of Arthur Andersen, previously the most highly regarded global accounting firm.

• MCIWorldCom inflated profits by claiming expenses as investments, and Jack Grubman promoted their stock.

• Merrill Lynch paid $100 million to move the story about Henry Blodgett, a security analyst writing scathing emails about promoted firms, off the front pages.

• The chairman and CEO of the NYSE resigned after it was revealed he had a compensation package of over $150 million, and some firms being regulated served as directors of the exchange.

• Large US mutual funds allowed firms to trade on stale news.

Manias, Panics, and Crashes: A Summary of Chapters 2-9

• Chapter 2 presents a stylized model of speculation, credit expansion, financial distress, and crisis that follows classical economic ideas of over-trading, revulsion, and discredit.

• Hyman Minsky's model of an unstable financial system prone to crisis has great explanatory power for earlier crises in the US and Western Europe, as well as real estate and securities surges in Japan and other countries.

• Chapter 3 explores whether markets in securities and real estate are always rational or whether speculation can be destabilizing, examining historical events that triggered manias.

• Financial liberalization or deregulation in Japan, Nordic countries, some Asian countries, Mexico, Russia, and Iceland has led to domestic monetary expansion and increased borrowing for speculative investment.

• Chapter 4 analyzes the monetary dimensions of manias and panics, noting occasions when a boom or panic was triggered by a monetary event and how innovations in finance can shock the system.

• Rapid increases in credit available to homeowners and real estate developers following the innovation of securitization and mortgage-backed securities contributed to the rapid expansion of the financial sector during real estate booms in the US, Britain, Ireland, and Iceland.

• Chapter 5 reviews the domestic aspects of a banking crisis, questioning whether official warnings can halt manias and discussing the turning point that ultimately produces a crisis.

• Chapter 6 discusses the impacts of a mania on domestic spending and resulting euphoria, including extravagant expenditures by individuals and countries building the tallest buildings in the world.

• Chapter 7 explores the discovery of frauds and swindles that developed in the froth of a mania, including personal and corporate frauds such as Bernie Madoff's Ponzi scheme and Enron's fraudulent practices.

• Chapter 8 covers the international contagion of manias and crises from the seventeenth to the first half of the twentieth century, examining competing narratives and possible linkages among countries.

• Chapter 9 highlights the four waves of banking crises since the early 1980s and the relationships among the successive waves, noting the systematic relationship between surges in credit and real estate prices in Mexico, Japan, Southeast Asia, and the US, Britain, Ireland, Iceland, and Spain.

• The likelihood that these four waves are independent and unrelated seems low, with a connection between the developing country debt crisis and the surge in property prices in Japan and a follow-on crisis in the debt of governments of Greece and other Mediterranean countries.Crises in the Financial World: Enron, MCIWorldCom, and the Euro

• Enron and MCIWorldCom used off-balance sheet financing and inflated prices to show increased profits, resulting in their collapse and the failure of Arthur Andersen.

• Investment banking firms paid $1.4 billion to forestall trials, and several individuals, including six Enron senior managers, went to jail.

• Martha Stewart was charged and imprisoned for obstruction of justice related to a share deal.

• Chapter 10 focuses on the real estate and banking crises in Ireland and Spain, as well as the sovereign debt crises in Greece and Portugal.

• Greece had negative economic growth for five consecutive years, a fiscal deficit of over 10% of its GDP, and a government debt to GDP ratio of 140%.

• The EU opposed Greece leaving the euro, resulting in domestic deflation and serial write-offs of government debt.

• Several other countries have high ratios of debt to GDP, preventing them from adopting more expansive fiscal and expenditure policies.

• The collapse of Enron led to the failure of Arthur Andersen, previously the most highly regarded global accounting firm.

• MCIWorldCom inflated profits by claiming expenses as investments, and Jack Grubman promoted their stock.

• Merrill Lynch paid $100 million to move the story about Henry Blodgett, a security analyst writing scathing emails about promoted firms, off the front pages.

• The chairman and CEO of the NYSE resigned after it was revealed he had a compensation package of over $150 million, and some firms being regulated served as directors of the exchange.

• Large US mutual funds allowed firms to trade on stale news.

Manias, Panics, and Crashes: A Summary of Chapters 2-9

• Chapter 2 presents a stylized model of speculation, credit expansion, financial distress, and crisis that follows classical economic ideas of over-trading, revulsion, and discredit.

• Hyman Minsky's model of an unstable financial system prone to crisis has great explanatory power for earlier crises in the US and Western Europe, as well as real estate and securities surges in Japan and other countries.

• Chapter 3 explores whether markets in securities and real estate are always rational or whether speculation can be destabilizing, examining historical events that triggered manias.

• Financial liberalization or deregulation in Japan, Nordic countries, some Asian countries, Mexico, Russia, and Iceland has led to domestic monetary expansion and increased borrowing for speculative investment.

• Chapter 4 analyzes the monetary dimensions of manias and panics, noting occasions when a boom or panic was triggered by a monetary event and how innovations in finance can shock the system.

• Rapid increases in credit available to homeowners and real estate developers following the innovation of securitization and mortgage-backed securities contributed to the rapid expansion of the financial sector during real estate booms in the US, Britain, Ireland, and Iceland.

• Chapter 5 reviews the domestic aspects of a banking crisis, questioning whether official warnings can halt manias and discussing the turning point that ultimately produces a crisis.

• Chapter 6 discusses the impacts of a mania on domestic spending and resulting euphoria, including extravagant expenditures by individuals and countries building the tallest buildings in the world.

• Chapter 7 explores the discovery of frauds and swindles that developed in the froth of a mania, including personal and corporate frauds such as Bernie Madoff's Ponzi scheme and Enron's fraudulent practices.

• Chapter 8 covers the international contagion of manias and crises from the seventeenth to the first half of the twentieth century, examining competing narratives and possible linkages among countries.

• Chapter 9 highlights the four waves of banking crises since the early 1980s and the relationships among the successive waves, noting the systematic relationship between surges in credit and real estate prices in Mexico, Japan, Southeast Asia, and the US, Britain, Ireland, Iceland, and Spain.

• The likelihood that these four waves are independent and unrelated seems low, with a connection between the developing country debt crisis and the surge in property prices in Japan and a follow-on crisis in the debt of governments of Greece and other Mediterranean countries.Crises in the Financial World: Enron, MCIWorldCom, and the Euro

• Enron and MCIWorldCom used off-balance sheet financing and inflated prices to show increased profits, resulting in their collapse and the failure of Arthur Andersen.

• Investment banking firms paid $1.4 billion to forestall trials, and several individuals, including six Enron senior managers, went to jail.

• Martha Stewart was charged and imprisoned for obstruction of justice related to a share deal.

• Chapter 10 focuses on the real estate and banking crises in Ireland and Spain, as well as the sovereign debt crises in Greece and Portugal.

• Greece had negative economic growth for five consecutive years, a fiscal deficit of over 10% of its GDP, and a government debt to GDP ratio of 140%.

• The EU opposed Greece leaving the euro, resulting in domestic deflation and serial write-offs of government debt.

• Several other countries have high ratios of debt to GDP, preventing them from adopting more expansive fiscal and expenditure policies.

• The collapse of Enron led to the failure of Arthur Andersen, previously the most highly regarded global accounting firm.

• MCIWorldCom inflated profits by claiming expenses as investments, and Jack Grubman promoted their stock.

• Merrill Lynch paid $100 million to move the story about Henry Blodgett, a security analyst writing scathing emails about promoted firms, off the front pages.

• The chairman and CEO of the NYSE resigned after it was revealed he had a compensation package of over $150 million, and some firms being regulated served as directors of the exchange.

• Large US mutual funds allowed firms to trade on stale news.

Manias, Panics, and Crashes: A Summary of Chapters 2-9

• Chapter 2 presents a stylized model of speculation, credit expansion, financial distress, and crisis that follows classical economic ideas of over-trading, revulsion, and discredit.

• Hyman Minsky's model of an unstable financial system prone to crisis has great explanatory power for earlier crises in the US and Western Europe, as well as real estate and securities surges in Japan and other countries.

• Chapter 3 explores whether markets in securities and real estate are always rational or whether speculation can be destabilizing, examining historical events that triggered manias.

• Financial liberalization or deregulation in Japan, Nordic countries, some Asian countries, Mexico, Russia, and Iceland has led to domestic monetary expansion and increased borrowing for speculative investment.

• Chapter 4 analyzes the monetary dimensions of manias and panics, noting occasions when a boom or panic was triggered by a monetary event and how innovations in finance can shock the system.

• Rapid increases in credit available to homeowners and real estate developers following the innovation of securitization and mortgage-backed securities contributed to the rapid expansion of the financial sector during real estate booms in the US, Britain, Ireland, and Iceland.

• Chapter 5 reviews the domestic aspects of a banking crisis, questioning whether official warnings can halt manias and discussing the turning point that ultimately produces a crisis.

• Chapter 6 discusses the impacts of a mania on domestic spending and resulting euphoria, including extravagant expenditures by individuals and countries building the tallest buildings in the world.

• Chapter 7 explores the discovery of frauds and swindles that developed in the froth of a mania, including personal and corporate frauds such as Bernie Madoff's Ponzi scheme and Enron's fraudulent practices.

• Chapter 8 covers the international contagion of manias and crises from the seventeenth to the first half of the twentieth century, examining competing narratives and possible linkages among countries.

• Chapter 9 highlights the four waves of banking crises since the early 1980s and the relationships among the successive waves, noting the systematic relationship between surges in credit and real estate prices in Mexico, Japan, Southeast Asia, and the US, Britain, Ireland, Iceland, and Spain.

• The likelihood that these four waves are independent and unrelated seems low, with a connection between the developing country debt crisis and the surge in property prices in Japan and a follow-on crisis in the debt of governments of Greece and other Mediterranean countries.Crises in the Financial World: Enron, MCIWorldCom, and the Euro

• Enron and MCIWorldCom used off-balance sheet financing and inflated prices to show increased profits, resulting in their collapse and the failure of Arthur Andersen.

• Investment banking firms paid $1.4 billion to forestall trials, and several individuals, including six Enron senior managers, went to jail.

• Martha Stewart was charged and imprisoned for obstruction of justice related to a share deal.

• Chapter 10 focuses on the real estate and banking crises in Ireland and Spain, as well as the sovereign debt crises in Greece and Portugal.

• Greece had negative economic growth for five consecutive years, a fiscal deficit of over 10% of its GDP, and a government debt to GDP ratio of 140%.

• The EU opposed Greece leaving the euro, resulting in domestic deflation and serial write-offs of government debt.

• Several other countries have high ratios of debt to GDP, preventing them from adopting more expansive fiscal and expenditure policies.

• The collapse of Enron led to the failure of Arthur Andersen, previously the most highly regarded global accounting firm.

• MCIWorldCom inflated profits by claiming expenses as investments, and Jack Grubman promoted their stock.

• Merrill Lynch paid $100 million to move the story about Henry Blodgett, a security analyst writing scathing emails about promoted firms, off the front pages.

• The chairman and CEO of the NYSE resigned after it was revealed he had a compensation package of over $150 million, and some firms being regulated served as directors of the exchange.

• Large US mutual funds allowed firms to trade on stale news.

Manias, Panics, and Crashes: A Summary of Chapters 2-9

• Chapter 2 presents a stylized model of speculation, credit expansion, financial distress, and crisis that follows classical economic ideas of over-trading, revulsion, and discredit.

• Hyman Minsky's model of an unstable financial system prone to crisis has great explanatory power for earlier crises in the US and Western Europe, as well as real estate and securities surges in Japan and other countries.

• Chapter 3 explores whether markets in securities and real estate are always rational or whether speculation can be destabilizing, examining historical events that triggered manias.

• Financial liberalization or deregulation in Japan, Nordic countries, some Asian countries, Mexico, Russia, and Iceland has led to domestic monetary expansion and increased borrowing for speculative investment.

• Chapter 4 analyzes the monetary dimensions of manias and panics, noting occasions when a boom or panic was triggered by a monetary event and how innovations in finance can shock the system.

• Rapid increases in credit available to homeowners and real estate developers following the innovation of securitization and mortgage-backed securities contributed to the rapid expansion of the financial sector during real estate booms in the US, Britain, Ireland, and Iceland.

• Chapter 5 reviews the domestic aspects of a banking crisis, questioning whether official warnings can halt manias and discussing the turning point that ultimately produces a crisis.

• Chapter 6 discusses the impacts of a mania on domestic spending and resulting euphoria, including extravagant expenditures by individuals and countries building the tallest buildings in the world.

• Chapter 7 explores the discovery of frauds and swindles that developed in the froth of a mania, including personal and corporate frauds such as Bernie Madoff's Ponzi scheme and Enron's fraudulent practices.

• Chapter 8 covers the international contagion of manias and crises from the seventeenth to the first half of the twentieth century, examining competing narratives and possible linkages among countries.

• Chapter 9 highlights the four waves of banking crises since the early 1980s and the relationships among the successive waves, noting the systematic relationship between surges in credit and real estate prices in Mexico, Japan, Southeast Asia, and the US, Britain, Ireland, Iceland, and Spain.

• The likelihood that these four waves are independent and unrelated seems low, with a connection between the developing country debt crisis and the surge in property prices in Japan and a follow-on crisis in the debt of governments of Greece and other Mediterranean countries.Crises in the Financial World: Enron, MCIWorldCom, and the Euro

• Enron and MCIWorldCom used off-balance sheet financing and inflated prices to show increased profits, resulting in their collapse and the failure of Arthur Andersen.

• Investment banking firms paid $1.4 billion to forestall trials, and several individuals, including six Enron senior managers, went to jail.

• Martha Stewart was charged and imprisoned for obstruction of justice related to a share deal.

• Chapter 10 focuses on the real estate and banking crises in Ireland and Spain, as well as the sovereign debt crises in Greece and Portugal.

• Greece had negative economic growth for five consecutive years, a fiscal deficit of over 10% of its GDP, and a government debt to GDP ratio of 140%.

• The EU opposed Greece leaving the euro, resulting in domestic deflation and serial write-offs of government debt.

• Several other countries have high ratios of debt to GDP, preventing them from adopting more expansive fiscal and expenditure policies.

• The collapse of Enron led to the failure of Arthur Andersen, previously the most highly regarded global accounting firm.

• MCIWorldCom inflated profits by claiming expenses as investments, and Jack Grubman promoted their stock.

• Merrill Lynch paid $100 million to move the story about Henry Blodgett, a security analyst writing scathing emails about promoted firms, off the front pages.

• The chairman and CEO of the NYSE resigned after it was revealed he had a compensation package of over $150 million, and some firms being regulated served as directors of the exchange.

• Large US mutual funds allowed firms to trade on stale news.

Manias, Panics, and Crashes: A Summary of Chapters 2-9

• Chapter 2 presents a stylized model of speculation, credit expansion, financial distress, and crisis that follows classical economic ideas of over-trading, revulsion, and discredit.

• Hyman Minsky's model of an unstable financial system prone to crisis has great explanatory power for earlier crises in the US and Western Europe, as well as real estate and securities surges in Japan and other countries.

• Chapter 3 explores whether markets in securities and real estate are always rational or whether speculation can be destabilizing, examining historical events that triggered manias.

• Financial liberalization or deregulation in Japan, Nordic countries, some Asian countries, Mexico, Russia, and Iceland has led to domestic monetary expansion and increased borrowing for speculative investment.

• Chapter 4 analyzes the monetary dimensions of manias and panics, noting occasions when a boom or panic was triggered by a monetary event and how innovations in finance can shock the system.

• Rapid increases in credit available to homeowners and real estate developers following the innovation of securitization and mortgage-backed securities contributed to the rapid expansion of the financial sector during real estate booms in the US, Britain, Ireland, and Iceland.

• Chapter 5 reviews the domestic aspects of a banking crisis, questioning whether official warnings can halt manias and discussing the turning point that ultimately produces a crisis.

• Chapter 6 discusses the impacts of a mania on domestic spending and resulting euphoria, including extravagant expenditures by individuals and countries building the tallest buildings in the world.

• Chapter 7 explores the discovery of frauds and swindles that developed in the froth of a mania, including personal and corporate frauds such as Bernie Madoff's Ponzi scheme and Enron's fraudulent practices.

• Chapter 8 covers the international contagion of manias and crises from the seventeenth to the first half of the twentieth century, examining competing narratives and possible linkages among countries.

• Chapter 9 highlights the four waves of banking crises since the early 1980s and the relationships among the successive waves, noting the systematic relationship between surges in credit and real estate prices in Mexico, Japan, Southeast Asia, and the US, Britain, Ireland, Iceland, and Spain.

• The likelihood that these four waves are independent and unrelated seems low, with a connection between the developing country debt crisis and the surge in property prices in Japan and a follow-on crisis in the debt of governments of Greece and other Mediterranean countries.Crises in the Financial World: Enron, MCIWorldCom, and the Euro

• Enron and MCIWorldCom used off-balance sheet financing and inflated prices to show increased profits, resulting in their collapse and the failure of Arthur Andersen.

• Investment banking firms paid $1.4 billion to forestall trials, and several individuals, including six Enron senior managers, went to jail.

• Martha Stewart was charged and imprisoned for obstruction of justice related to a share deal.

• Chapter 10 focuses on the real estate and banking crises in Ireland and Spain, as well as the sovereign debt crises in Greece and Portugal.

• Greece had negative economic growth for five consecutive years, a fiscal deficit of over 10% of its GDP, and a government debt to GDP ratio of 140%.

• The EU opposed Greece leaving the euro, resulting in domestic deflation and serial write-offs of government debt.

• Several other countries have high ratios of debt to GDP, preventing them from adopting more expansive fiscal and expenditure policies.

• The collapse of Enron led to the failure of Arthur Andersen, previously the most highly regarded global accounting firm.

• MCIWorldCom inflated profits by claiming expenses as investments, and Jack Grubman promoted their stock.

• Merrill Lynch paid $100 million to move the story about Henry Blodgett, a security analyst writing scathing emails about promoted firms, off the front pages.

• The chairman and CEO of the NYSE resigned after it was revealed he had a compensation package of over $150 million, and some firms being regulated served as directors of the exchange.

• Large US mutual funds allowed firms to trade on stale news.

Financial Crises: An Overview

• Eurozone countries gave up the right to manage monetary policy and reduce currency prices when they adopted the euro.

• Economic growth in the Eurozone has been slower than in the US and UK, despite less severe banking crises.

• European Central Bank has been expansive, but growth has been slow and unemployment in Greece remains high.

• Domestic crisis management options range from hands-off approach to various measures like legal holidays and deposit insurance.

• Policy choices of a domestic lender of last resort focus on moral hazard and whether to extend credit to insolvent institutions.

• IMF was established in the 1940s to reduce currency price manipulation but has become an agent of large countries delaying currency declines.

• The US banking crisis of 2008 could have been avoided if Lehman Brothers had been acquired by another firm or government ownership taken over.

• The severity of the credit crisis that began in September 2008 was due to the US government's decision not to provide financial assistance to Lehman Brothers.

• The last forty years have seen a large number of financial crises, leading to the question of whether the presence of the IMF encouraged profligate national financial policies.

• Alan Greenspan, Ben Bernanke, Henry Paulson, Timothy Geithner, and Sheila Barr have written books about their experiences during the 2008 banking crisis.

• Historians view events as unique, while economists search for patterns in the data and systematic relationships between events and their antecedents.

• The economic model of a banking crisis covers the boom and bust phases, focusing on the episodic nature of manias and subsequent events.Banking Crises and the Anatomy of a Typical Crisis

• Crises occurred regularly at ten-year intervals in the 19th century, and less regularly thereafter.

• Hyman Minsky's model explains banking crises in the US, UK, and other market economies.

• The supply of credit is pro-cyclical, increasing during booms and decreasing during slowdowns.

• Investors become more optimistic during expansions, revise profitability estimates, and become more willing to borrow.

• Lenders become less risk-averse during expansions and more willing to make risky loans.

• Fragility in financial arrangements and increased likelihood of banking crises result from the increase and subsequent decline in the supply of credit.

• Minsky's model follows the tradition of classical economists who focused on variability in the supply of credit.

• Minsky emphasized heavily indebted borrowers who increased their indebtedness to buy real estate, stocks, or commodities in search of short-term profits.

• The events that lead to a crisis start with a "displacement" or innovation, an exogenous shock to the macroeconomic system.

• Business firms and individuals borrow to take advantage of the anticipated profits in the sector affected by the shock.

• Economic growth quickens, and there might be feedback to even greater optimism.

• Crises occur when investors become distress sellers as the prices of the securities they bought decline.

Financial Crises: An Overview

• Eurozone countries gave up the right to manage monetary policy and reduce currency prices when they adopted the euro.

• Economic growth in the Eurozone has been slower than in the US and UK, despite less severe banking crises.

• European Central Bank has been expansive, but growth has been slow and unemployment in Greece remains high.

• Domestic crisis management options range from hands-off approach to various measures like legal holidays and deposit insurance.

• Policy choices of a domestic lender of last resort focus on moral hazard and whether to extend credit to insolvent institutions.

• IMF was established in the 1940s to reduce currency price manipulation but has become an agent of large countries delaying currency declines.

• The US banking crisis of 2008 could have been avoided if Lehman Brothers had been acquired by another firm or government ownership taken over.

• The severity of the credit crisis that began in September 2008 was due to the US government's decision not to provide financial assistance to Lehman Brothers.

• The last forty years have seen a large number of financial crises, leading to the question of whether the presence of the IMF encouraged profligate national financial policies.

• Alan Greenspan, Ben Bernanke, Henry Paulson, Timothy Geithner, and Sheila Barr have written books about their experiences during the 2008 banking crisis.

• Historians view events as unique, while economists search for patterns in the data and systematic relationships between events and their antecedents.

• The economic model of a banking crisis covers the boom and bust phases, focusing on the episodic nature of manias and subsequent events.Banking Crises and the Anatomy of a Typical Crisis

• Crises occurred regularly at ten-year intervals in the 19th century, and less regularly thereafter.

• Hyman Minsky's model explains banking crises in the US, UK, and other market economies.

• The supply of credit is pro-cyclical, increasing during booms and decreasing during slowdowns.

• Investors become more optimistic during expansions, revise profitability estimates, and become more willing to borrow.

• Lenders become less risk-averse during expansions and more willing to make risky loans.

• Fragility in financial arrangements and increased likelihood of banking crises result from the increase and subsequent decline in the supply of credit.

• Minsky's model follows the tradition of classical economists who focused on variability in the supply of credit.

• Minsky emphasized heavily indebted borrowers who increased their indebtedness to buy real estate, stocks, or commodities in search of short-term profits.

• The events that lead to a crisis start with a "displacement" or innovation, an exogenous shock to the macroeconomic system.

• Business firms and individuals borrow to take advantage of the anticipated profits in the sector affected by the shock.

• Economic growth quickens, and there might be feedback to even greater optimism.

• Crises occur when investors become distress sellers as the prices of the securities they bought decline.

Financial Crises: An Overview

• Eurozone countries gave up the right to manage monetary policy and reduce currency prices when they adopted the euro.

• Economic growth in the Eurozone has been slower than in the US and UK, despite less severe banking crises.

• European Central Bank has been expansive, but growth has been slow and unemployment in Greece remains high.

• Domestic crisis management options range from hands-off approach to various measures like legal holidays and deposit insurance.

• Policy choices of a domestic lender of last resort focus on moral hazard and whether to extend credit to insolvent institutions.

• IMF was established in the 1940s to reduce currency price manipulation but has become an agent of large countries delaying currency declines.

• The US banking crisis of 2008 could have been avoided if Lehman Brothers had been acquired by another firm or government ownership taken over.

• The severity of the credit crisis that began in September 2008 was due to the US government's decision not to provide financial assistance to Lehman Brothers.

• The last forty years have seen a large number of financial crises, leading to the question of whether the presence of the IMF encouraged profligate national financial policies.

• Alan Greenspan, Ben Bernanke, Henry Paulson, Timothy Geithner, and Sheila Barr have written books about their experiences during the 2008 banking crisis.

• Historians view events as unique, while economists search for patterns in the data and systematic relationships between events and their antecedents.

• The economic model of a banking crisis covers the boom and bust phases, focusing on the episodic nature of manias and subsequent events.Banking Crises and the Anatomy of a Typical Crisis

• Crises occurred regularly at ten-year intervals in the 19th century, and less regularly thereafter.

• Hyman Minsky's model explains banking crises in the US, UK, and other market economies.

• The supply of credit is pro-cyclical, increasing during booms and decreasing during slowdowns.

• Investors become more optimistic during expansions, revise profitability estimates, and become more willing to borrow.

• Lenders become less risk-averse during expansions and more willing to make risky loans.

• Fragility in financial arrangements and increased likelihood of banking crises result from the increase and subsequent decline in the supply of credit.

• Minsky's model follows the tradition of classical economists who focused on variability in the supply of credit.

• Minsky emphasized heavily indebted borrowers who increased their indebtedness to buy real estate, stocks, or commodities in search of short-term profits.

• The events that lead to a crisis start with a "displacement" or innovation, an exogenous shock to the macroeconomic system.

• Business firms and individuals borrow to take advantage of the anticipated profits in the sector affected by the shock.

• Economic growth quickens, and there might be feedback to even greater optimism.

• Crises occur when investors become distress sellers as the prices of the securities they bought decline.

Financial Crises: An Overview

• Eurozone countries gave up the right to manage monetary policy and reduce currency prices when they adopted the euro.

• Economic growth in the Eurozone has been slower than in the US and UK, despite less severe banking crises.

• European Central Bank has been expansive, but growth has been slow and unemployment in Greece remains high.

• Domestic crisis management options range from hands-off approach to various measures like legal holidays and deposit insurance.

• Policy choices of a domestic lender of last resort focus on moral hazard and whether to extend credit to insolvent institutions.

• IMF was established in the 1940s to reduce currency price manipulation but has become an agent of large countries delaying currency declines.

• The US banking crisis of 2008 could have been avoided if Lehman Brothers had been acquired by another firm or government ownership taken over.

• The severity of the credit crisis that began in September 2008 was due to the US government's decision not to provide financial assistance to Lehman Brothers.

• The last forty years have seen a large number of financial crises, leading to the question of whether the presence of the IMF encouraged profligate national financial policies.

• Alan Greenspan, Ben Bernanke, Henry Paulson, Timothy Geithner, and Sheila Barr have written books about their experiences during the 2008 banking crisis.

• Historians view events as unique, while economists search for patterns in the data and systematic relationships between events and their antecedents.

• The economic model of a banking crisis covers the boom and bust phases, focusing on the episodic nature of manias and subsequent events.Banking Crises and the Anatomy of a Typical Crisis

• Crises occurred regularly at ten-year intervals in the 19th century, and less regularly thereafter.

• Hyman Minsky's model explains banking crises in the US, UK, and other market economies.

• The supply of credit is pro-cyclical, increasing during booms and decreasing during slowdowns.

• Investors become more optimistic during expansions, revise profitability estimates, and become more willing to borrow.

• Lenders become less risk-averse during expansions and more willing to make risky loans.

• Fragility in financial arrangements and increased likelihood of banking crises result from the increase and subsequent decline in the supply of credit.

• Minsky's model follows the tradition of classical economists who focused on variability in the supply of credit.

• Minsky emphasized heavily indebted borrowers who increased their indebtedness to buy real estate, stocks, or commodities in search of short-term profits.

• The events that lead to a crisis start with a "displacement" or innovation, an exogenous shock to the macroeconomic system.

• Business firms and individuals borrow to take advantage of the anticipated profits in the sector affected by the shock.

• Economic growth quickens, and there might be feedback to even greater optimism.

• Crises occur when investors become distress sellers as the prices of the securities they bought decline.

Financial Crises: An Overview

• Eurozone countries gave up the right to manage monetary policy and reduce currency prices when they adopted the euro.

• Economic growth in the Eurozone has been slower than in the US and UK, despite less severe banking crises.

• European Central Bank has been expansive, but growth has been slow and unemployment in Greece remains high.

• Domestic crisis management options range from hands-off approach to various measures like legal holidays and deposit insurance.

• Policy choices of a domestic lender of last resort focus on moral hazard and whether to extend credit to insolvent institutions.

• IMF was established in the 1940s to reduce currency price manipulation but has become an agent of large countries delaying currency declines.

• The US banking crisis of 2008 could have been avoided if Lehman Brothers had been acquired by another firm or government ownership taken over.

• The severity of the credit crisis that began in September 2008 was due to the US government's decision not to provide financial assistance to Lehman Brothers.

• The last forty years have seen a large number of financial crises, leading to the question of whether the presence of the IMF encouraged profligate national financial policies.

• Alan Greenspan, Ben Bernanke, Henry Paulson, Timothy Geithner, and Sheila Barr have written books about their experiences during the 2008 banking crisis.

• Historians view events as unique, while economists search for patterns in the data and systematic relationships between events and their antecedents.

• The economic model of a banking crisis covers the boom and bust phases, focusing on the episodic nature of manias and subsequent events.Banking Crises and the Anatomy of a Typical Crisis

• Crises occurred regularly at ten-year intervals in the 19th century, and less regularly thereafter.

• Hyman Minsky's model explains banking crises in the US, UK, and other market economies.

• The supply of credit is pro-cyclical, increasing during booms and decreasing during slowdowns.

• Investors become more optimistic during expansions, revise profitability estimates, and become more willing to borrow.

• Lenders become less risk-averse during expansions and more willing to make risky loans.

• Fragility in financial arrangements and increased likelihood of banking crises result from the increase and subsequent decline in the supply of credit.

• Minsky's model follows the tradition of classical economists who focused on variability in the supply of credit.

• Minsky emphasized heavily indebted borrowers who increased their indebtedness to buy real estate, stocks, or commodities in search of short-term profits.

• The events that lead to a crisis start with a "displacement" or innovation, an exogenous shock to the macroeconomic system.

• Business firms and individuals borrow to take advantage of the anticipated profits in the sector affected by the shock.

• Economic growth quickens, and there might be feedback to even greater optimism.

• Crises occur when investors become distress sellers as the prices of the securities they bought decline.

Financial Crises: An Overview

• Eurozone countries gave up the right to manage monetary policy and reduce currency prices when they adopted the euro.

• Economic growth in the Eurozone has been slower than in the US and UK, despite less severe banking crises.

• European Central Bank has been expansive, but growth has been slow and unemployment in Greece remains high.

• Domestic crisis management options range from hands-off approach to various measures like legal holidays and deposit insurance.

• Policy choices of a domestic lender of last resort focus on moral hazard and whether to extend credit to insolvent institutions.

• IMF was established in the 1940s to reduce currency price manipulation but has become an agent of large countries delaying currency declines.

• The US banking crisis of 2008 could have been avoided if Lehman Brothers had been acquired by another firm or government ownership taken over.

• The severity of the credit crisis that began in September 2008 was due to the US government's decision not to provide financial assistance to Lehman Brothers.

• The last forty years have seen a large number of financial crises, leading to the question of whether the presence of the IMF encouraged profligate national financial policies.

• Alan Greenspan, Ben Bernanke, Henry Paulson, Timothy Geithner, and Sheila Barr have written books about their experiences during the 2008 banking crisis.

• Historians view events as unique, while economists search for patterns in the data and systematic relationships between events and their antecedents.

• The economic model of a banking crisis covers the boom and bust phases, focusing on the episodic nature of manias and subsequent events.Banking Crises and the Anatomy of a Typical Crisis

• Crises occurred regularly at ten-year intervals in the 19th century, and less regularly thereafter.

• Hyman Minsky's model explains banking crises in the US, UK, and other market economies.

• The supply of credit is pro-cyclical, increasing during booms and decreasing during slowdowns.

• Investors become more optimistic during expansions, revise profitability estimates, and become more willing to borrow.

• Lenders become less risk-averse during expansions and more willing to make risky loans.

• Fragility in financial arrangements and increased likelihood of banking crises result from the increase and subsequent decline in the supply of credit.

• Minsky's model follows the tradition of classical economists who focused on variability in the supply of credit.

• Minsky emphasized heavily indebted borrowers who increased their indebtedness to buy real estate, stocks, or commodities in search of short-term profits.

• The events that lead to a crisis start with a "displacement" or innovation, an exogenous shock to the macroeconomic system.

• Business firms and individuals borrow to take advantage of the anticipated profits in the sector affected by the shock.

• Economic growth quickens, and there might be feedback to even greater optimism.

• Crises occur when investors become distress sellers as the prices of the securities they bought decline.

Financial Crises: An Overview