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Bubbleology Bubbleology is a term coined by Kevin Hassett that describes the all-too-common stock market roller coaster ride A ride that for a while seems destined to never end only later to tumble miserably off the unfinished track History is no stranger to bubbles The earliest report of such phenomena for instance occurred in the early seventeenth century at the height of the Dutch Tulip Mania The popularity of tulips grew so much that people began abandoning their jobs and squandering their life savings to grow them Eventually they became such a marketable product that they were traded publicly as investments in what was known as the Dutch Tulip Bulb Exchange Tarses One Dutchman was even reported to have paid two wagon loads of wheat four loads of rye four fat oxen eight fat swine twelve fat sheep two hogsheads of wine four barrels of beer two barrels of butter 1000 pounds of cheese a marriage bed with linens and a sizable wagon to haul it away for one tulip -- a transaction not unlike many others at the time Tarses Warnings ignored the value of tulips began to inflate at a remarkable rate Concerned the Dutch government issued a decree on April 27 1637 that declared tulips and tulip bulbs products not investments and that they had to be bought and sold on that basis Tarses With no new money coming into the market to further inflate the bubble and with banks calling in their tulip loans tulip prices collapsed overnight and the bubble burst Although we might find the Tulip Mania humorous recent history has seen similar devastation In an alarming course of events in 1907 the entire New York Banking Institution collapsed At that time and in many cases today banks did not maintain as much cash as their account holders had deposited Moen Solvency refers to the relationship between assets and liabilities If an institution has more liabilities
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