The ECB's interest rate cut last week was in the response to falling prices in the Eurozone and the rise of the general fear that Europe is heading for deflation. See below an FT interview with the head of macro markets at Goldman Sachs about this subject and click here to read a Wall Street Journal article on this topic.
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.