Jeff Bezos, one of the world’s richest men, sought to draw a distinction between financial bubbles (bad) and industrial bubbles (less bad, maybe good). Bezos, after all, built one of the 21st century’s great businesses, Amazon, in the middle of a bubble that turned contemporaries such as Webvan and Pets.com into a punchline.

"The most obvious lesson of the railway manias is not that bubbles are good, but that hope springs eternal and greedy investors never learn."

Of course, what's missing in all of this is that nobody knows there's a bubble until afterwards... That's sort of THE POINT with financial markets (#1275237), prodding, trying, evaluating, and ultimately predicting the future (the collective, money-weighted best guess we have).

The economist and Nobel laureate William Nordhaus once tried to estimate what slice of the value of new ideas went to the corporations who owned them, and how much went to everyone else (mostly consumers). He concluded that the answer — in the US, between 1948 and 2001 — was 3.7 per cent to the innovating companies, and 96.3 per cent to everyone else. Put another way, the spillover benefits were 26 times larger than the private profits.

Hudson, alas, is not a man to emulate. He kept his finances looking respectable by making distinctly Ponzi-like payments, funding dividends for existing shareholders out of freshly raised capital, and he defrauded his fellow shareholders by getting companies he controlled to buy up his personal shares at above-market prices.