A reminder of the old Internet bubble bubble that preceded the one on commercial paper.

To hear some experts to revel in the balance sheet of the Internet bubble, it is to believe that investor enthusiasm for information technology was a perfect demonstration of the folly of men. We must finish with this vision that puts everyone in one basket and that continues to speak of collective madness or hysterical euphoria to describe this dark period in market history. It is too easy to talk of madness and obsession with greed, once past events and dashed hopes.


For economists, this sort of explanation always rings hollow and does not mean much. This, in fact, does nothing to help us understand the behavior of those who have invested their savings in start-ups non-beneficiaries whose market value exceeded that of the largest companies in the world. We prefer to assume that the individual (whether investor, consumer, contractor) is guided by the search for personal interest, whether the stock market either up or down.
This ignores the economic history and psychology of the most basic support that individuals are at times driven by greed, while at other times they would not. People are still trying to grasp as best they can, the opportunities available to them to improve their lot. The adventure titles Internet was an opportunity hard to pass up. Risky course (proof: the majority of small investors have lost money), but an opportunity nonetheless tempting.

We recognize a bubble when not inflated, but when it is completely deflated. As the Internet bubble has not burst in a spectacular crash, researchers are just beginning to admit that it was’ a financial bubble. Even at the height of the bubble in March 2000, few financial economists dare say that we were in a phase of euphoria irrational. Proof: the foundations of American universities, recommended by the brightest management ners of portfolios in the world, have not deserted the stock markets and technology sectors in 2000, quite the contrary. Same Caisse de depot et placement du Québec has been tempted by the new information revolution, in his bid to allow the acquisition of Videotron by Quebecor. Who is to say that these institutions had descended into madness, hysteria or blind greed unchecked?

Although he felt the need, in 1996, to alert his countrymen to the threat of irrational exuberance in stock markets, Alan Greenspan has nevertheless sustained in 1998 and 1999 in particular, that the technologies information contributed to greater economic stability and industrial Western societies. So much so that a magazine Business Week as serious as could be said that the President Reserve Federal was now part of the circle of defenders of the “New Economy”.

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