Bubble Trouble

Dave gives us his take on the recent investment rumblings

Amsterdam's Schiphol Airport is a model which all major hubs should aspire to.

Relaxed, spacious, with wonderful details: plenty of places to relax, a library, the Bols Genever museum and a tiny branch of the Rijksmuseum. With an hour or so to kill on my way back from the Groningen festival I headed towards this culture zone to see what was on show. On the way I passed a duty-free store in whose window a bottle of malt encased in a glass case slowly revolved. “Price €250,000.” Lights flashed off its diamonds.

Upstairs in the museum was an exhibition of flower paintings from Holland's 17th century ‘Golden Age'. Tulips dominated. As I looked, I thought of that revolving bottle. The earliest of the paintings were from the 1630s, when ‘Tulipmania' was at its height and one tulip bulb could cost the same as a house.

During this first market bulb growers, seeing demand increasing, raised their prices. Then speculators arrived, driving it ever higher. The tulip ceased to be the point, making easy money was all that mattered. Bulbs weren't traded, futures were. Investors could trade in tulip stock options. Sound familiar?

The bubble popped in 1637 leaving some ruined and everyone looking somewhat foolish.

Some historians have argued the bubble was inflated by people caught up in the madness of the moment. After all, what could go wrong?

Everyone loved tulips, the price was guaranteed to keep rising, the good times would continue forever. That was never going to happen...

• By : Dave Broom
• In : A dram with Dave Broom
• Issue : 103
• Page : 12
• Words : 677