4 Business World

The market crisis dejour – throughout time, real estate markets have followed a crowd mentality. The more heated a market gets, the more individuals want to jump in, and the higher the prices are driven.

This bubble has occured throughout history and the cycles can be studied consistently. Professor Watson teaches serial entrepreneurs and the role of the market economy. Regardless of whether we want to think about recent banking markets which have Broke, these events are not original. They have routinely occurred throughout time.

One of the most reported upon historical markets that popped was Amsterdam’s Tuplip economy. We can consider the Tulipmania of the tulip market that burst in 1637 as a popularly reported historical account of a industry that overheated.

Tulips were originally introduced 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 industry mania continued – and ten years later the price had increased another ten times. At the market peak, the price of a single Semper Augustus bulb reached 10,000 florins – the equivalent of what it cost to acquire a house in central Amsterdam at the time.

With time the market peaked and there was no-one remaining who still wanted to acquire these tulips at such high prices. Within months, the market value crashed and thousands of people were left in economic ruin.

Throughout time – we have seen similar bubbles reoccur. As the crowd continues to get more excited, those contrary views become less and less popular to be heard. Are any of the recent market bubbles any different? In today’s environment of PC speech, are the contrarian voices that speak up for morality, ethics, and honesty any different? Throughout history, these contrarian voices have been denigrated and ignored. But the market for products and the market for principles has a way of always correcting itself from the heat of the crowd mentality – and those extremist views tend to have their bubbles burst as the required correction occurs. Today’s market is no different.

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