The Historic Link Between Tulips and the Sub-Prime Mortgage Debacle

Almost every living individual is being effected adversely in some way by the international economic meltdown we are experiencing today. The genesis of this severe financial downturn is attributed to the United States government encouraging the expansion of homeownership to people who would have historically been deemed unworthy of obtaining credit. The banking systems participation and eagerness to leverage credit risks by extending loans to people with poor credit histories is the principal cause of the current sub-prime mortgage crisis.

Historically, the bursting of the credit bubble follows a long and dubious line of similar scandals. Greed, hubris and suspension of common sense and disbelief are always present before the hen comes home to roost after the gravy time has ended. The panic of 1908 in the United States, the worldwide Great Depression and the implosion of the technology stock bubble in the late 1990′s are memorable examples of euphoric periods followed by great loss and assignation of blame as to the causes of these financial busts.

These peaks and troughs in economic fortune are not unique to modern times. One of the earliest documented financial crazes was the Dutch Tulip Mania in the 17th century. The Dutch, being a tiny, mercantile nation, surrounded by larger, stronger empires were the earliest creators of trade policies and sophisticated financial products. One of their most creative vehicles was the introduction of the futures market.

Tulips were introduced into the Dutch economy and agronomy early in the 17th century. They quickly became prized for their beauty and the floral engineering that created many unique, exotic varieties of tulips. An exchange mechanism developed for speculation in the valuations of the various strains of bulbs. By 1637 a full-scale mania had erupted in evaluating future tulip bulb harvests.

Records from that period are sketchy, but it is known that a single Viceroy Tulip bulb was valued under contract for between 3000 and 4200 Dutch florins in 1637. Contrast this with the annual wage of a skilled Dutch craftsman of 150 florins per year. Isn’t this a definitive example of excessive senseless mania?

The Dutch referred to such trading contracts as “wind trade”. This was because no one ever actually took possession of the tulip bulbs. They simply owned a piece of paper, a contract that documented their claim on the tulip bulbs. Does this example of financial engineering ring any bells today in our current distressed situation?

The popularity of the tulip trade, and the amazing returns, mostly paper gains that were realized by the early speculators created a stampede of inexperienced, gullible speculators. Noblemen, farmers, sausage makers, chimney sweeps and day laborers began to speculate hoping to turn a few florins into exponentially huge investment returns. Of course, the last investors in, were the most harshly abused by the implosion of the tulip bulb speculative bubble. This is true in all bubble cycles.

The British economist Charles Mackey wrote a tome in the 18th century cataloguing the history of the Dutch Tulip Mania. His “Extraordinary Popular Delusions and the Madness of Crowds” remains in print to this day. Business schools and economists refer to Mackey’s study of the herd mentality of people during manias. Nevertheless, though Extraordinary Popular Delusions is still studied, its lessons have hardly been taken to heart.

The greed and hubris that are always present in manias too often define the human condition. People tend to see someone profit from an enterprise and try to emulate their perceived success. This engenders ever more people attempting to participate in the affair and the result is a panic, a mania, a bubble, then disaster.

The no money down payment, zero document loans, offered in the last decade created a completely different type of borrower and lender. The borrowers have no skin in the game. They get to possess a home in which they have no equity. As long as their condition is stable they can maintain possession. However, if their fiscal condition recedes, or the value of the property declines, they are in deep trouble. Foreclosure is a reasonable action for them to undertake to simply walk away from a gamble that did not work out for them.

The lenders have suspended proper underwriting standards in order to induce entry into these risky home sales transactions. They have little skin in the game, because they have conceived exotic packaged investment vehicles where mortgages are bundled and sold to investment speculators all over the world. The owner of the mortgage is actually unknown to the mortgagee, or even the originator of the loan. The loan originator collects their fees and offloads the loan obligation from their balance sheet. The risky transaction is now someone else’s responsibility.

As a result we have endured a period of fake prosperity built on credit swaps, personal irresponsibility, corporate irresponsibility and governmental corruption. The mania of our time is cheap credit. This bubble has burst, and every homeowner faces shrinkage in the valuation of their property because of the greed of speculators and the attempt of government to secure homeownership for people who should be renters. Community banks and credit unions that have maintained high lending standards are being hurt because of the recklessness of the giant money center banking institutions.
Retirees and prudent investors have seen their savings and investments slaughtered because of the inane greed and corruption of others.

The 1990′s technology stock bust decimated a generation of people who came to believe that investing in the inter-net was the new “Holy Grail” for prosperity. Startup companies with no sales, no balance sheets and inexperienced management were given huge market valuations. Investors were advised that the tech boom was just in the first or second inning of this nine inning game. Brokerage firms provided guidance on equities that they actually made markets for. This bit of double dealing lead to constant buy calls on tech firms stock that insiders knew had no prospects for success.

The Dutch Tulip Mania, the Mississippi Company, the South Seas Company, the South African Milk Culture craze and the many modern crazes, Ponzi schemes and asset bubbles that we continue to experience are testament to man’s inability to control emotions. Greed, power and wealth are aphrodisiacs for many. We are imperfect beings, susceptible to herd mentality, even when we have knowledge of history’s lessons and could apply these to spare ourselves the pain of participating in activity that will assuredly lead to great pain and loss. Discipline, responsibility and thrift are essential to long term success.

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

3 Menopause Remedies That Relieve Menopause Symptoms

You shouldn’t feel that hormone replacement therapy is the only option open to you. Before the FDA approved it, there were many women in various cultures have used their own effective menopause remedies for menopause symptoms relief. However nowadays, we forget that how the people before us cope with the same problem and changes in life without any benefit of modern medicines. You can consider some of the other natural alternatives if you feel uncomfortable with using synthetic drugs to treat your menopause signs and symptoms.

Menopause Tea

Since ancient, indigenous and cultures have long been aware of the healing aspects of tea. For example the world’s first painkiller was made by the tea from the willow bark tree. Certain herbal combinations also can used to reduce or eliminate the unpleasant side effects of menopause like night sweats, hot flashes and flagging energy levels. However hen using tea to relieve your symptoms, you have to avoid caffeine. Most women find that they having a hard time getting adequate rest during the menopause transition and you don’t want anything to interfere with your rest.

Soy Menopause Benefits

Soy is another natural remedy which can help support menopause symptoms reduction. As you know, soy milk is one of the excellent sources of calcium and it also can easily be used in place of cows’ milk. You also can use it with berries or your favorite fruit for an energy boosting smoothie. It helps to keep unwanted weight off during this time as it is low in fat. You may enjoy tofu which made from soy and others same benefits as the milk.

Menopause Progesterone Cream

Many women are turning to using progesterone cream instead as they start to concern related to hormone replacement therapy to treat menopause symptoms. Most people prefer this safer alternative as this technology employs bio identical hormones instead of synthetic ones. Moreover the menopause symptoms will be relief by using this type of hormone and the risk of side effects is minimal. These bio identical hormones are made from plants and it can exactly duplicate the kinds of hormones the body makes its own. As a result, progesterone cream is more effective treatment compare to other menopause treatment.

Compare HRT that may improve your chances of contracting ovarian, breast and uterine cancers, you may try to choose menopause remedies for menopause symptoms relief. To find a suitable menopause relief doesn’t have to be a gamble with your health. Progesterone cream can be a choice of menopause treatment as it is safer and more effective.

Starting a Flower Delivery Business

In today’s troubled financial climate setting up a new business is quite a big gamble. There are so many areas of trade and industry in the City of London that are struggling to survive on a day to day basis. We are all very much aware of the amount of companies going into liquidation and of the terrible and rapid rise in unemployment. These are worrying times for a lot of London’s businesses. For many people the very idea of a new business venture at the moment would seem like a very bad idea indeed.

However, even in such an uncertain time as this there are still some types of business that are thriving in the midst of all of the financial instability that surrounds them. One such industry is floristry.

Imagine starting a new business in the City of London. Let’s say, for example, that it is called ‘Fast Flower Delivery in London’. As long as ‘Fast Flower Delivery in London’ is managed responsibly then the chances are that it will prosper. A lot of people would still have serious doubts about this. However, there are several matters to take into consideration.

Firstly think of all of the occasions in our lives that we mark with the purchasing of flowers. There are the ones that are marked out for us on the calendar such as Mother’s Day, Easter and Valentine’s Day. These are all guaranteed sales for ‘Fast Flower Delivery in London’ and these dates come as standard with each New Year. Then there are the other occasions that will vary in date but are still concrete occasions that will come along on a regular basis.

These are things such as birthdays, apologies, thank-yous, deaths, romantic gestures and so on.
But it doesn’t end there, in fact very much the opposite. With a little thought and with only minimal advertising in the right areas of the City, ‘Fast Flower Delivery in London’ could go on to cater for displays of flowers in all manner of places around London – cafes, restaurants, schools, homes for the elderly. The list goes on. You would be surprised at the amount of reception areas and waiting rooms that people would ask you to brighten up with a few bouquets of flowers.

Many of London’s florists also offer other such services such as classes in things like flower arranging and other floral crafts. Many customers in your shop would love to attend something like this and learn a new hobby. By designing and printing a few adverts to let people know of these classes you could soon find yourself earning even more money by running a course for a couple of extra hours each week. Your advertising for this would also be free as the best place to situate these posters would be in your shop! Why not incorporate these ideas into ‘Fast Flower Delivery in London’ as well?