Ep 5. The South Sea Bubble

Crashes and Crises: Lessons from a History of Financial Disasters season 1 episode 5 is titled "The South Sea Bubble". In this episode, viewers are taken back to 1711 when the South Sea Company was founded in England with the aim of reducing the country's national debt. The company was created by a group of investors who promised to reduce the debt in exchange for exclusive trading rights with South America and the Pacific.

The company initially enjoyed success as investors flocked to buy their stocks. The value of the shares continued to rise, and many people believed that the company was a sound investment. However, the success was short-lived, and the company's bubble eventually burst in 1720.

The episode explores the factors that contributed to the company's downfall. One of the main reasons was that the company's trading opportunities were exaggerated, and the promises made to investors were not kept. As a result, when the truth was eventually revealed, the company's stocks plummeted, and many investors lost their money.

The episode also explores the wider implications of the South Sea Bubble. The collapse of the company led to a broader economic recession in England, and many other companies also suffered due to the loss of investor confidence. The government was also affected as they had given the company a monopoly over the slave trade, which led to further controversy.

Throughout the episode, the show's experts provide insights into how this historic event can inform modern-day finance. They highlight the importance of transparency in companies and the need for investors to be diligent in their research. They also look at how the South Sea Bubble was not an isolated event, and similar financial bubbles have occurred throughout history, such as the dot-com bubble in the late 1990s.

Overall, "The South Sea Bubble" provides a fascinating insight into one of the most significant financial disasters in history. Viewers come away with a better understanding of the complex factors that can lead to a financial bubble and crash, as well as the lessons that can be learned from these events.