Charles Kindleberger: Manias, Panics, and Crashes: A history of the financial crisis

Although it's not so much a history of financial crises as an analysis of their causes and effects, Charles Kindleberger's Manias, Panics, and Crashes is indisputably a classic of modern finance. The book is of course intriguing now for its relevance to our current economic crisis, one that appeared with such mysterious speed and devastation that making sense of the forces that created it - and trying to piece together the solutions that will end it - is perhaps a little premature. Yet reading Mr Kindleberger's book now, without the benefit of hindsight, can still help us understand the many ways in which governments and central banks have reacted to the crisis. For much of their reaction falls in line with his theories about boom and bust cycles, the salve for which he says is muscular action from the economic powers that be. The use of central banks as lenders of last resort, cash injections and assets and lowered interest rates are all measures the author endorses - and measures that central banks have taken to breathe life into the financial system.

In his steady, academic tone, Mr Kindleberger, an economic historian who died in 2003, rummages through history's dustbins and finds plenty of turmoil that comes across as all too familiar today. It's only unfortunate that his analysis had to end with the dot-com crash of 2000. It would have been interesting to hear what he might have said about the troubles of the present, having himself helped engineer some of the most daring government sallies into the world of finance in the 1940s, '50s and '60s as an official at the US department of state and the US Federal Reserve and a key architect of the Marshall Plan.

Yet while he may have died six years ago, Mr Kindleberger's voice is very much present in the economic stimulus packages and government takeovers that we've been hearing so much about these past few months. And it's a voice that's still worth listening to.

Publisher: Wiley, 2005