News Summary

• A new book suggests that despite downsides, investment bubbles at least overcome risk aversion and build useful capital.
• Byrne Hobart and Tobias Huber bring a more positive perspective to bubbles as “innovation accelerators” that can be “the driving force in escaping economic stagnation” Not all bubbles are good, of course.
• Examples of harmful ones include the Dutch tulip mania and South Sea bubble, stock market booms that crashed in 1929 and 1987, Japan’s real estate and stock market bubbles in the 1980s, and the U.S. housing bubble whose bursting brought the global financial crisis of 2007-8.