Following on from yesterday's post, the Report of the Parliamentary Commission on Banking Standards contains another novel recommendation. The report recommends that an additional external member be appointed to the Bank of England's Financial Policy Committee, "with particular responsibility for taking a historical view of financial stability and systemic risk, and drawing the attention of the FPC colleagues and the wider public through speeches and articles, to historical and international parallels to contemporary concerns".
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.