The most literate (and funny) financial columnist, Joe Nocera of The New York Times, begins Saturday's column with a quote from Isaac Newton: "I can calculate the motions of heavenly bodies but not the madness of peoples." Newton uttered these words apropos the South Sea Bubble, a financial disaster in the early eighteenth century that was a complex of war, diplomacy, finance, fantasy, deception, self-deception and slavery. Newton himself lost his life's savings in the insanity, says Nocera. If you want to read something serious about Newton, my old professor Frank Manuel has written three masterful books on him.

In any case, this posting is not about Newton or Manuel. It's about Nocera's column or as he puts it, "After the fact, bubbles always seem obvious."

Here's his sum-up:

Every financial institution relied on by investors--with the possible exception of Treasury bills--remains under severe pressure. Credit markets have been frozen all week, with giant multinational banks afraid to lend money to other giant multi-national banks. The Japanese stock market dropped 24 percent this week. Panic was everywhere.
In the United States, the Dow Jones average dropped 370 points on Monday. On Tuesday, it dropped 508 points. Wednesday: 189 points. Thursday: 679 points, including a sickening plunge of more than 450 points in the last hour of trading. And it didn't relent on Friday; although the Dow wound up 'only' down 128 points, it came after an early 700 point swoon, followed by a brutal whipsaw of a day. It was the worst week in history for the Dow.
And maybe the worst week in history for the American economy, as well.

Nocera tell us other tales in this riveting piece, true tales.