The market crisis dejour - historically, real estate markets have experienced a crowd mentality. The more popular a market becomes, the more people want to buy in, and the higher the prices are driven.
This mindset has occured throughout history and the cycles can be analyzed consistently. Professor G. Watson teaches ethics and entrepreneurship [...]
The market crisis dejour - historically, real estate markets have experienced a crowd mentality. The more popular a market becomes, the more people want to buy in, and the higher the prices are driven.
This mindset has occured throughout history and the cycles can be analyzed consistently. Professor G. Watson teaches ethics and entrepreneurship and the role of the market economy. Regardless of whether we want to think about recent technology markets which have Burst, these fluctuations are not new. They have routinely occurred throughout time.
One of the most discussed historical markets that broke was Amsterdam’s Tuplip sector. We can study the Tulipmania of the tulip market that burst in 1637 as a popularly documented historical account of a economy that overheated.
Tulips were originally imported from Turkey in the early 16th century. As new “varieties” of tulip bulbs were introduced, competition intensified and their value soared. One honestly rare variety was the Semper Augustus which reached values in excess of 1,000 florins per single bulb in 1623. This price was more than six times the average annual wage.
This economic mania continued - and 10 years later the price had increased another ten times. At the market peak, the price of a single Semper Augustus tulip bulb reached 10,000 florins - the value of what it cost to purchase a house in central Amsterdam at the time.
Eventually the market peaked and there was no-one remaining who still wanted to purchase these bulbs at such high valuations. Within weeks, the market value crashed and many of people were left in economic ruin.
Throughout history - we have observed similar bubbles develop. As the crowd continues to get more hyped, those contrary voices become less and less popular to be heard. Are any of the recent market bubbles any different? In modern environment of PC speech, are the contrarian voices that stand up for morality, ethics, and integrity any different? Throughout time, these contrarian voices have been demeaned and ignored. But the market for products and the market for ideas has a way of always correcting itself from the heat of the crowd mentality - and those polar views tend to have their bubbles burst as the neccessary correction occurs. Today’s market is no different.
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