• Fyre Festival: 19th Century Style
    • ‘Beginning in 1821, the city of London was overrun with reports of a previously unknown nation nestled on the Caribbean coastline of what is now Honduras. Called Poyais, it was supposedly a lush and untapped paradise of fertile farmland, rolling hills and gold-rich streams. Its native “Poyers” were described as a friendly and hardworking people, and its capital, St. Joseph, was a European-style settlement dotted with public buildings and even an opera house. Poyais boasted a deep-water port and a pleasant climate that made it immune to the scourge of tropical disease. It was, a guidebook claimed, “one of the most healthy and beautiful spots in the world.” It was also a complete and total fraud. By the time it finally ran its course several years later, it had duped scores of unsuspecting investors and led to the deaths of over 150 people.’
    • I wrote about this unbelievable story here

  • Does Credit Affect Stock Trading? Evidence from the South Sea Bubble
    • ‘We study the relationship between credit, stock trading and prices bubbles. The role of credit in financial bubbles is theoretically ambiguous. On the one hand, it may help rational arbitrageurs to trade against a bubble; on the other hand, it may enable naive speculators to buy overvalued assets. We construct a novel database containing every individual stock transaction in three major British companies during the 1720 South Sea Bubble. We link these transactions to daily margin loan positions and subscription lists of new share issues. We find that margin loan holders acted as extrapolators, i.e., they were more likely to buy (sell) following high (low) past returns. Loan holders also signed up to buy new shares of overvalued companies and incurred large trading losses. Our results suggest that credit provision was instrumental in fueling the bubble.’

  • Learning from History: Volatility and Financial Crises
    • ‘We study the effects of stock market volatility on risk-taking and financial crises by constructing a cross-country database spanning up to 211 years and across 60 countries. Prolonged periods of low volatility have strong in-sample and out-of-sample predictive power over the incidence of banking crises and can be used as a reliable crisis indicator, whereas volatility itself does not predict crises. Low volatility leads to excessive credit buildups and balance sheet leverage in the financial system, indicating that agents take more risk in periods of low risk, supporting the dictum that “stability is destabilizing”.’

  • Sovereign Debt Defaults: Insights from History
    • ‘History provides many insights to address the issue of sovereign debt defaults. This article first presents a detailed account of defaults in historical perspective. It then discusses the solution devised in the past to address sovereign debt crises and sets these into perspective with today’s answers when crises occur. Finally, the paper stresses the role of history when events under study don’t occur frequently and when archival data may add a new light to understand the process of crises resolution. The impact of odious debts declarations, of state succession, and of international relations on sovereign defaults and on their settlement is thus also addressed.’
  • Supermarket: One of the Most Important (and least known) American Inventions of All Time
    • ‘While this date is often considered the birth of the supermarket, pinning down the exact ancestry and birth of the idea is not easy. Most inventions and innovations result from numerous experiments and ideas, recombining in new forms. While even true of “hard” inventions like airplanes, automobiles, and television, tracking origins can be even harder in social and cultural inventions – the situation comedy, movies, magazines, newspapers, fast food, the motel – or the supermarket.’
  • The Rise and Fall of American Cities: 1790 – 2010
    • ‘An animated chart showing the rise and fall of American cities. If you play (or replay) the graphic linked here, you will see the rise and fall of the thirty most populous metropolitan areas in the United States at each decennial census from 1790 through 2010.’

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