Riding the South Sea bubble

This paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare's Bank, a fledgling West End London banker, knew that a bubble was in progress and nonetheless invested in the stock; it was profitable to "ride the bubble." Using a unique dataset on daily trades, we show that this sophisticated investor was not constrained by institutional factors such as restrictions on short sales or agency problems. Instead, this study demonstrates that predictable investor sentiment can prevent attacks on a bubble; rational investors may only attack when some coordinating event promotes joint action.

With a bang, not a whimper: Pricking Germany's "stock market bubble" in 1927 and the slide into depression

In May 1927, the German central bank intervenedindirectly to reduce lending to equity investors.The crash that followed ended the only stockmarket boom during Germany s relative stabilization 1924-28. This paper examines thefactors that lead to the intervention as well asits consequences. We argue that genuine concernabout the exuberant level of the stock market,in addition to worries about an inflow offoreign funds, tipped the scales in favour ofintervention. The evidence strongly suggeststhat the German central bank under HjalmarSchacht was wrong to be concerned aboutstockprices-there was no bubble. Also, theReichsbank was mistaken in its belief thata fall in the market would reduce theimportance of short-term foreign borrowing,and help to ease conditions in the money market.The misguided intervention had important realeffects. Investment suffered, helping to tipGermany into depression.

The dot-com bubble, the Bush deficits and the US current account

Over the past decade the US has experienced widening current account deficits and a steady deterioration of its net foreign asset position. During the second half of the 1990s, this deterioration was fueled by foreign investment in a booming US stock market. During the first half of the 2000s, this deterioration has been fuelled by foreign purchases of rapidly increasing US government debt. A somewhat surprising aspect of the current debate is thatstock market movements and fiscal policy choices have been largely treated as unrelated events. Stock market movements are usually interpreted as reflecting exogenous changes in perceived or real productivity, while budget deficits are usually understood as a mainly political decision. We challenge this view here and develop two alternative interpretations. Both are based on the notion that a bubble (the dot-com bubble) has been driving the stock market, but differ in their assumptions about the interactions between this bubble and fiscal policy (the Bush deficits). The benevolent view holds that a change in investorsentiment led to the collapse of the dot-com bubble and the Bush deficits were a welfare-improving policy response to this event. The cynical view holds instead that the Bush deficits led to the collapse of the dot-com bubble as the new administration tried to appropriate rents from foreign investors. We discuss the implications of each of these views for the future evolution of the US economy and, in particular, its net foreign asset position.

Recreating the South Sea bubble: Lessons from an experiment in financial history

Major bubble episodes are rare events. In this paper, we examine what factors might cause some asset price bubbles to become very large. We recreate, in a laboratory setting, some of the specific institutional features investors in the South Sea Company faced in 1720. Several factors have been proposed as potentially contributing to one of the greatest periods of asset overvaluation in history: an intricate debt-for-equity swap, deferred payment for these shares, and the possibility of default on the deferred payments. We consider which aspect might have had the most impact in creating the South Sea bubble. The results of the experiment suggest that the company?s attempt to exchange its shares for government debt was the single biggest contributor to the stock price explosion, because of the manner in which the swap affected fundamental value. Issuing new shares with only partial payments required, in conjunction with the debt-equity swap, also had a significant effect on the size of the bubble. Limited contract enforcement, on the other hand, does not appear to have contributed significantly.

Anomalous Proper-Motions in the Cygnus Super Bubble Region

In an analysis of proper motions of O and B stars contained the Input Catalogue for Hipparcos, we have found a clear deviation from the expected pattern of systematic motions which can be readily identified with the associations Cygnus OB1 and Cygnus OB9, located near de the edge of the Cygnus Superbubble. Teha anomalous motions are directed outwards from the center of the Superbubble, which is coincident with tha association Cygnus OB2. This seems to support the hypothesis of a strong stellar and supernova activity in Cygnus 0B2 giving rise to the Superbubble and, by means of gravitational instabilities in its boundaries, to Cygnus 0B1 and Cygnus OB9. New uvby-beta aperture photometry of selected O and B stars in the area of Cygnus OB1 and Cygnus OB9 is also presented and analyzed in this paper.

Light induced defects in thermal annealed hydrogenated amorphous silicon

The metastable defects of a-Si:H samples annealed at temperatures in the 300-550°C range have been studied by photothermal deflection spectroscopy (PDS). The light-soaked samples show an increase in optical absorption in the 0.8 to 1.5 eV range. The metastable defect density decreases when the annealing temperature increases, while the defect density increases. This decrease in the metastable defect density shows an almost linear correlation with the decrease in the hydrogen content of the samples, determined by IR transmission spectroscopy and thermal desorption spectroscopy.

Crystal defects and spin tunneling in single crystals of Mn12 clusters

The question addressed in this paper is that of the influence of the density of dislocations on the spin tunneling in Mn12 clusters. We have determined the variation in the mosaicity of fresh and thermally treated single crystals of Mn12 by analyzing the widening of low angle x-ray diffraction peaks. It has also been well established from both isothermal magnetization and relaxation experiments that there is a broad distribution of tunneling rates which is shifted to higher rates when the density of dislocations increases.

Formation and distribution of point defects on a disclination line near a free nematic interface

Point defects of opposite signs can alternately nucleate on the -1/2 disclination line that forms near the free surface of a confined nematic liquid crystal. We show the existence of metastable configurations consisting of periodic repetitions of such defects. These configurations are characterized by a minimal interdefect spacing that is seen to depend on sample thickness and on an applied electric field. The time evolution of the defect distribution suggests that the defects attract at small distances and repel at large distances.

Dynamics of a paramagnetic colloidal particle driven on a magnetic-bubble lattice

We present a theoretical study of the recently observed dynamical regimes of paramagnetic colloidal particles externally driven above a regular lattice of magnetic bubbles [P. Tierno, T. H. Johansen, and T. M. Fischer, Phys. Rev. Lett. 99, 038303 (2007)]. An external precessing magnetic field alters the potential generated by the surface of the film in such a way to either drive the particle circularly around one bubble, ballistically through the array, or in triangular orbits on the interstitial regions between the bubbles. In the ballistic regime, we observe different trajectories performed by the particles phase locked with the external driving. Superdiffusive motion, which was experimentally found bridging the localized and delocalized dynamics, emerge only by introducing a certain degree of randomness into the bubbles size distribution.