The Madness of Finance ? unsettling economics

I have always enjoyed the stories about speculative insanity in Mackay?s Extraordinary Popular Delusions and the Madness of Crowds. I was surprised to read the New York Times reporting that nothing has changed in the last century and a half. First, here is a famous snippet from the book:
Mackay, Charles. 1852. Extraordinary Popular Delusions and the Madness of Crowds (NY: Noonday, 1932).

55: One projector set up a company to profit from a wheel for perpetual motion. Another projector proposed ?A company for carrying on an undertaking of great advantage, but nobody to know what it is.? ?Next morning, at nine o?clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when be shut up at three o?clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of 2000 pounds. He set off the same evening for the Continent. He was never heard of again.?

Here is the high tech version

Bilton, Nick. 2012. ?Disruptions: Tech Valuations Defy the Restraints of Reality.? New York Times (23 January): p. B 4.

http://bits.blogs.nytimes.com/2012/01/22/disruptions-the-sloshing-sound-of-tech-valuations/

?Some investors no longer even need to hear about a company to hand out money. Jakob Lodwick, an entrepreneur and co-founder of Vimeo, recently raised $2 million simply on the promise that he might have a good idea for a company in the near future.?

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Source: http://michaelperelman.wordpress.com/2012/01/26/the-madness-of-finance/

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