This Wired story I read today "Can we prevent the next bubble?" is s a nice story, but it is a fable. It has been told by Wired and almost every financial moralist since Charles MacKay because the "mania" offers a wonderfully conventional morality tale that ends with the lesson that markets need regulation. The tulips were part of the art mania that helped feed all those painters who ended up on Ernie Kovacs ' cigar wrappers; but the speculations in the flowers and the art that portrayed them were in no way comparable to our recent real estate finance bubble.

Anne Goldgar is a wonderful scholar (i.e. one of those school teachers who give their profession a bad name by actually doing research). Her book, Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age, University of Chicago Press, 2007, goes over the history of the bubble in painstaking detail (the woman had the audacity to actually read the financial records of the individual transactions, not just look at the secondary sources for a price index). The story she tells is fascinating, but it is not the one that our latest crop of "social scientists" are so desperate to find.


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