The bubble into which Warburg Pincus liquidated the bulk of its investment in BEA Systems was extreme, but it was not unique. My awareness of the prelude to the Crash of 1929 had persisted some thirty years after my scholarly engagement with economic policy in response to the financial crisis and economic contraction of 1929–1931. At that time the Radio Corporation of America (RCA) had been an emblem of the “new economy”: broadcasting represented the revolutionary application of scientific innovation to a commercial medium of boundless potential. An image of the RCA stock price from the mid-1920s through its apogee and beyond served me as a momento mori for speculative excess, especially as VERITAS Software and BEA Systems were swept up by the 1998–2000 version.

Figure 7.1 sets out the development of the stock price for RCA, VERITAS and BEA over the six years, denominated in months, beginning with January 1926 in the case of RCA and with January 1997 in the case of VERITAS and BEA. Because I had once studied the trajectory of RCA’s stock after it rose by a factor of ten in less than two years, it was easy to foresee what awaited the shares of VERITAS and BEA when they rose by broadly comparable multiples over an even shorter period of time.

The persistent recurrence of speculative excess is a defining feature of financial capitalism wherever and whenever bankers are flush with cash to invest in liquid secondary markets in financial assets. Three canonical personifications of financial capitalism can be abstracted from the historical record. In Fernand Braudel’s version, financial capitalism is heroic. It is as if “the characteristic advantage of standing at the commanding heights of the economy … consisted precisely of not having to confine oneself to a single choice, of being able, as today’s businessman would put it, to keep one’s options open.”