The temptation of bubbles

DaDa / tr. by Phil Newell)

Everyone knows that tulip is a kind of flower name, but who has ever thought that a small tulip once set off a huge economic wave.

The book, called Tulip mania, chronicles a sensational auction in the Netherlands in the 17th century.

In 1637, a bar owner in the northern Dutch city of Alkemar died and his seven children were adopted by the church orphanage. Although the children were unfortunate, their father left a fortune-99 tulips, which was a great wealth in Holland at that time. For the sake of the children's livelihood, the orphanage decided to auction these tulips. As soon as the news got out, it immediately caused a sensation throughout the journey.

Tulips are very popular with royalty and aristocrats in Europe. In 1593, the first tulip was introduced into the Netherlands and immediately became a symbol of fashion, wealth, status and status. At that time, the Dutch were called sea coachmen, they had a huge fleet of ships, shuttled between the oceans, and once controlled the trade between the East and the West, monopolizing 40% of the world trade. They also formed the first joint-stock company, the earliest stock exchange, and the wealth of the Dutch increased sharply as a result of the development of shipping, trade and stock trading. Because people will pursue status once they have money, people begin to chase tulips that can show off their status and status.

The price of tulips kept rising because the supply of tulips fell short of demand, and the early traders who sold tulips made money, so they attracted more businessmen to come in. Finally, even ordinary citizens were involved in the speculative business of tulips. At this time, the tulip is no longer a symbol of status, status and fashion, it has become a tool and means for people to achieve wealth. Tulips have changed from luxury consumer goods to frenzied speculations. the trading of tulips has become popular in the Netherlands, and tulip markets have been set up in almost all cities. The prosperity of the trading market is enough to make people believe that all the wealth will be concentrated in the Netherlands. European money flowed into the Netherlands from all directions and joined the speculative trading of tulips.

It takes seven years for tulips to be planted to blossom, and speculators are eager for quick success and quick profits. they also trade unflowered bulbs, thus creating a futures market for tulips. In the era when people were crazy about tulips, only tulips could be called true wealth.

People flocked to the auction on that day, and 99 tulips sold for 90,000 guilders after fierce bidding round after round. Ninety thousand Dutch guilders, for an ordinary family at that time, was equivalent to the sum of three hundred years' income. The auction in Arkmar was later identified as the culmination of the tulip bubble, which led to the emergence of the most famous speculative bubble in financial history.

On the second day of the auction, a piece of news began to spread in the market. there was a pond of white tulip bulbs offering 1250 Dutch guilders, but there was no buyer. People suddenly realized that their tulips or bulbs would probably never have another seller, and the panic began to spread in the market. Everyone, whether florists, florists or speculators, was eager to sell their tulips, and the market collapsed in just six days.

(the picture above is a picture of the price trend of the tulip market at that time. This cliff-like price collapse appeared again and again in the asset trading market later. This picture can also be used to describe the Great Depression in 1929 and 1933, the Asian financial crisis in 1997 and 1998, the bursting of the US Internet bubble in 2000 and 2001, and China's A-share market in 2007.

The bursting of the tulip bubble took a heavy toll on the Dutch, many of whom lost their homes, and it took a decade for the Dutch economy to recover.

The tulip bubble is like a fable. When speculative capital encounters human greed, it will make people rich overnight and make wealth disappear in an instant. The story of the tulip bubble shows the greed and fear of human nature, which is the root of the irrational rise and fall of the investment market. Any goods, once become transactional assets and monetized wealth, will be constantly transformed into the rise and burst of asset bubbles in the impulse of the group, over and over again.