Book Review: A Short History of Financial Euphoria

A Short History of Financial Euphoria - John Kenneth Galbraith

Although I've enjoyed many quotes and anecdotes from Galbraith, this was my first book of his.  As usual, I enjoyed the histories of prior euphorias and of course agreed with the inevitability of manias and crashes.  At the same time, however, I was somewhat disappointed with his cursory review of each period of euphoria, particularly that of 1929, which did not discuss valuation at all.  Additionally, I found the tone to be somewhat disdainful.  Overall, I enjoyed the book, but it was a bit too conclusory for me (though this was implied by the title, so perhaps I expect too much).

Some quotes I enjoyed:
And thus the rule, supported by experience of centuries: the speculative episode always ends not with a whimper but with a bang.
In practice, the individual or individuals at the top of these institutions are often there because, as happens regularly in great organizations, theirs was mentally the most predictable and, in consequence, bureaucratically the least inimical of the contending talent.  He, she, or they are then endowed with the authority that encourages acquiescence from their subordinates and applause from their acolytes and that excludes adverse opinion or criticism.  They are thus admirably protected in what may be a serious commitment to error. 
The rush to invest engulfed the whole of Holland.  No person of minimal sensitivity of mind felt that he could be left behind.  Prices were extravagant; by 1636, a bulb of no previously apparent worth might be exchanged for "a new carriage, two grey horses and a complete harness."
In 1837 came the inevitable disenchantment and collapse.  A period of marked depression again ensued.  This episode did, however, have two new features--one of them of continuing significance today.  It clearly left behind the improvements, notably the canals, which had been the source of the speculative enthusiasm.  And it introduced a distinctly modern attitude toward the loans that were outstanding: in the somber conditions following the crash, these were viewed with indignation and simply not repaid.  Mississippi, Louisiana, Maryland, Pennsylvania, Indiana, and Michigan all repudiated their debts, although there was some mild later effort at repayment.  Anger was expressed that foreign banks and investors should now, in hard times, ask for payment of debts so foolishly granted and incurred.  A point must be repeated: only the pathological weakness of the financial memory, something that recurs so reliably in this history, or perhaps our indifference to financial history itself, allows us to believe that the modern experience of Third World debt, that now of Argentina, Brazil, Mexico, and the other Latin American countries, is in any way a new phenomenon. 
But not all of the excesses of leverage were in the West.  In these same years, in the more conservative precincts of New England, a bank was closed up with $500,000 in notes outstanding and a specie reserve of $86.48 in hand.
The only remedy, in fact, is an enhanced skepticism that would resolutely associate too evident optimism with probable foolishness and that would not associated with the acquisition, the deployment, or, for that matter, the administration of large sums of money.