Now I knew of the South Sea Bubble but not John Law and the Mississippi Bubble so I began reading; to my surprise I find that BOTH these events, as well as being almost simultaneous - and nearly 300 years ago (!!) - show similarities to today's events.
Law pioneered the concept of a note-issuing bank, shares in the company acting as a form of paper currency - the need had asisen due to the lack of precious metal and 'real' money. The company was private but to all intents and purposes tied to government and Royalty; it was successful at first but its collapse - after rampant speculation - caused an economic crisis in France and Europe: the system was based on trading shares in the Mississippi Company in return for government debt and the subsequent collapse had been delayed until eventually the entire government debt became property of the company, the company became property of the creditors (now shareholders) and the effective control fell into the hands of the government. Sound familiar? [Wiki] Law was dismissed, fled France and died in poverty less than 10 years later.
Only a year later in Britain, an Investigation in 1721, after the South Sea Company stock value had collapsed - leaving a trail of personal and company bankrupcies (including banks) - revealed widespread fraud amongst the company directors and corruption in the Cabinet. The Chancellor of the Exchequer was imprisoned and the Postmaster General and other Lords (ministers) were impeached.
Financial guru Marc Faber, in 2003 whilst reviewing 'The Great Swindle - The Story of the South Sea Bubble' by Virginia Cowles (Collins, 1960) - [Lesson of History I] said he...
"The 'bubble' model always involves a 'displacement,' which leads to extraordinary profit opportunities, overtrading, over-borrowings, speculative excesses, swindles and catchpenny schemes, followed by a crisis during which fraud on a massive scale comes to light, then by the closing act during which the outraged public calls for the culprits to be taken to account. In each case, excessive monetary stimulus and the use of credit fuels the flames of irrational speculation and public participation, which involves a larger and larger group of people seeking to become rich without any understanding of the object of speculation."
"...became more and more fascinated by the many parallels between this early period of speculation in our capitalistic age and today’s financial environment. In particular, I was astounded by the similar role that paper money, excessive credit creation, and highly questionable practices - by governments as well as businesses - played in fuelling the financial excesses in both periods.
In a second piece Marc Faber also points out [Lessons of History II]:
I know the entire fault of the international aspect of this current recession/depression isn't you-know-who's but I do wonder if it will come to be known as Brown's Bubble.
"The Mississippi Scheme and the South Sea Bubble are also interesting from another point of view.The wave of speculation in the period 1717 to 1720 spread across the entire European continent and the subsequent crisis was international in scope"