In this game, every snake looks like a ladder; climb until you feel the pang of poison
In the aptly titled book Extraordinary Popular Delusions and the Madness of Crowds, author Charles Mackay notes how John Law, the 18th Century Scottish financier whose Mississippi Company gave the modern world one of its first asset bubbles, forgot his own dictum — “a banker deserved death who made issues of paper without the necessary funds to provide for them.” The result? Shares of Mississippi Company started in 1719 at 500 livres (the French unit at the time), shot up to 10,000 livres and sank back to 500 livres in less than two years. Law himself died a lonely death in 1729, banished by the very public that had hailed him a hero just a few years earlier.
(This story appears in the 22 January, 2010 issue of Forbes India. To visit our Archives, click here.)