This wonderful, short book takes us behind the curtains of financial folly. It skillfully offers both anecdote and analysis of events that we may bereliving just now.
Rudi Dornbusch, Ford Professor of Economics and International Management, MIT
Famous First Bubbles is the most thorough, and thoughtful, examination of history's legendary speculative bubbles. We hear about these bubbles in popular discourse all the time, but almost never with any real insight or information about them. Garber shows that the reasons for these major speculative price movements are more subtle than is generally recognized. This book is important to read today, since our impressions of past bubbles influence our view of the current markets.
Robert J. Shiller, Cowles Foundation for Research in Economics, Yale University
This book is a wonderful antidote to the sloppy thinking and superficial research that underlies most of the talk about bubbles. Garber shows that fundamental changes were arguably driving the changes in price in the most famous historical examples of bubbles. The discussion of tulipmania is grounded in the political, social, and economic history of the Netherlands, a thorough examination of data and secondary sources, and a fascinating investigation of the biological origins of rare tulip bulbs. The treatment of the Mississippi Bubble rightly emphasizes the link between money creation and securities price fluctuations. Garber also captures the profound difficulty speculators must have faced when evaluating both the Mississippi and South sea companies, commercial schemes (which many scholars still believe might have worked), and the dangers of retrospective judgments about fundamentals based on actual collapses. The book is a model of how to combine careful theoretical reasoning with first rate-scholarship and a delightful sense of irony.
Charles Calomiris, School of Business, Columbia University
Garber's careful and reasoned analysis of key events in financial history provides a reality check for those who mistake uncertainty about the future for irrationality here and now.
Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets and Professor of Economics, Stern School of Business, New York University
Peter Garber has written the definitive book on the tulipmania and the South Sea bubbles. He integrates sound economic analysis with historical detail in a highly convincing manner. His bottom line that the earlier bubbles reflected sound economic fundamentals rather than 'irrational exuberance' should be heeded.
Michael D. Bordo, Department of Economics, Rutgers University
When stock markets boom, tulipmania, the South Sea Bubble, and the Mississippi Bubble are conjured up. These events are used to remind people that investors often yield to irrational euphorias. The authority of these famous first bubbles is invoked by journalists, policy makers, and economists to emphasize that swings in the markets are irrational and unpredictable. What is rarely remembered is that these episodes had fundamentals. In this book, Peter Garber identifies the fundamentals and debunks the ideas that these periods are bubbles. Thus, the stories of the bubbles are not cautionary tales that school us to expect a crash with every spectacular rise of the stock market.
Eugene N. White, Professor of Economics, Rutgers University
This brief and to-the-point look at famous 'popular decisions' makes a good case for the view that governments rather than markets are the source of financial crises.
Mike Dooley, Economics Department, University of California, Santa Cruz
