And when dreams deceive our wandering eyes in the heavy slumber of night, and under the spade the earth yields gold to the light of day: our greedy hands finger the spoil and snatch at the treasure, sweat too runs down our face, and a deep fear grips our heart that maybe someone will shake out our laden bosom, where he knows the gold is hid: soon, when these pleasures flee from the brain they mocked, and the true shape of things comes back, our mind is eager for what is lost, and moves with all its force among the shadows of the past Satyricon of Petronius Arbiter, circa A. An inclination to divine the future is another deeply ingrained trait. Together they comprise the act of financial speculation.
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Feb 11, Noah Goats rated it really liked it This history of financial speculation is an interesting look at one of the many negative aspects of human nature. We are a species of gamblers, and speculating in the stock market allows us to gamble while fooling ourselves into thinking that we are contributing something to the economy.
Chancellor shows how we seem to be unable to stop or even recognize reckless speculation for what it is despite the clear pattern established by history: a new technology or financial instrument or a combo of This history of financial speculation is an interesting look at one of the many negative aspects of human nature.
This book was written before the bursting of the dot-com and housing market bubbles, but they followed the same pattern: from hope to greed to irrational exuberance to fear to despair. To read it as a book on Speculation alone would be missing the point to some extent. The author sums up his own book in a couple of salient quotes: "Speculation is the name given to a failed investment and As the scale of my operations increased, I was called a Speculator.
Now I am called a banker. The story repeats in history following the same pattern. The author hints at Speculators as the culprit and the need for regulation. But it looks to me that his own book shows that it is endemic to the Free market system because of the above mentioned fundamental human failings. No amount of regulation will be able to stop Speculation. He said that the next wave of speculation always happens when all the effects of the previous bout of speculation fades in popular memory.
There is no point in blaming the Regulating authorities. If they intervene when the market is in a boom, everyone will pillory them for hurting growth and stifling the resulting prosperity. However, Galbraith suggested that new regulators can step in every few years and bring on new rules so that speculators do not have enough time to exploit the previous set of rules and bring on a crash.
But, I think even this is not feasible because often we find that the bureaucracy, Congress, Senate and the Administration filled by ex-Wall Street honchos. So, it is not in their interest to rein in Wall Street. So, Speculation is here to stay and we better learn to live with it. The book is not a fast paced read. There are voluminous footnotes which distract the reader.
Book Review: Devil Take the Hindmost, A History of Speculation – by Edward Chancellor
Devil Take the Hindmost: A History of Financial Speculation