Crashes and Crises: Lessons from a History of Financial Disasters

Professor Fullenkamp begins the course with the enormous influence of technology on today's investing, which brings with it a frightening potential for crashes and crises. Cover the Flash Crash of 2010 - a dip in the market that was hugely amplified by programmed trading. Then, delve into the phenomenon of cryptocurrencies such as Bitcoin, which rely on an innovation called blockchain technology.

Investigate two of the most notorious con men who ever lived: Charles Ponzi, after whom the Ponzi scheme is named, and "Match King" Ivar Kreuger, who employed an elaborate variant of Ponzi's swindle. Analyze the three ingredients that most Ponzi schemes share. Above all, learn to identify and be wary of investments that are too good to be true.

Contrast the freewheeling financial market of today with the staid system of the immediate post-World War II era. Were financial markets more stable in the past than they are now? How did the present system evolve? What type of market is normal: the steady and predictable kind or the chaotic and sometimes destructive one? In answering these questions, discover why we live in an era of busts.

The 17th-century tulip bubble is a classic case of futures trading run amok. But how much did tulip mania resemble today's speculative markets, as opposed to ordinary gambling? Learn the truth behind this notorious financial bubble, while reflecting on the problem of deciding a fair price for an asset, such as tulip bulbs. Also, consider how bubbles start and end.

Relive the "Wild West" days of the British stock market in the early 18th century, when a financially-strapped government and a public craze for investing created ideal conditions for one of history's most brazen stock manipulators. Trace John Blunt's use of the South Sea Company - and bribery - to generate a stock-buying frenzy, making him fabulously rich - until the bubble inevitably burst.

Delve into the details of the Mississippi bubble, an early 18th-century financial crisis sparked by speculation in the anticipated wealth of French Louisiana. Learn how the bubble's instigator, John Law, a Scottish gambler and convicted murderer, gained control of the French economy and pushed ideas that were ahead of their time - so far ahead that they plunged France into economic collapse.