Deja vu All Over Again: Agency, Uncertainty, Leverage and the Panic of 1857
The panic of 1857 is revisited with the benefit of hindsight provided by the panic of 2007-08, where a number of parallels are identified between the two panics. We present new evidence on causes of the failure of the financial institution that triggered the panic of 1857 and conduct a detailed analysis of railroad financial and accounting practices. New financial innovations are also studied-the railroad farm mortgage and farm mortgage-backed security-which had similarities to the modern sub-prime mortgage loan and MBS. Neglected risks and Knightian uncertainty appear to be fundamental reasons why investors continued to participate in a boom market that was also extremely fragile.
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| Length: | 56 pages |
| Date of creation: | Apr 2012 |
| Date of revision: | |
| Handle: | RePEc:hkm:wpaper:102012 |
| Contact details of provider: | Postal: 55th Floor , Two International Finance Centre , 8 Finance Street , Central, Hong Kong Phone: (852)2878 1978 Fax: (852)2878 7006 Web page: http://www.hkimr.org Email: More information through EDIRC
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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