Julian Gough came up with this piece about The Great Hargeisa Goat Bubble in one of his novels in 2003.
This is a must read for someone who wants to understand the way markets become irrational. A journey from discovery of a new market to its boom to its subsequent bust. This short 4 pager covers it all. Very highly recommended.
Here is an extract ...
"By this time the goat craze had become a mania. A severe shortage of goats, and infinite demand, led to excesses. The price of goats became ludicrous, and many animals were led to the town market which were loudly proclaimed to be goats but which on closer inspection proved to be dogs, dressed up. They were purchased anyway, the frightful animals, at grotesque prices.
"The sheer length of the boom was now leading to increased confidence. There was a loosening in credit. It seemed madness not to lend to a man who could pay you back handsomely the next day. And as a creditor, once you'd borrowed and repaid with interest a couple of times, the banks began to persuade you to borrow more.
"Soon the shortage of actual goats led to a booming market in goat futures, goat options and increasingly arcane goat derivative products. This trade in young, unborn, and even theoretical goats allowed yet more money into a market whose only bottleneck or brake up to this time had been the physical shortage of actual goats.
Link to Julian Gough's website
Link to The Great Hargeisa Goat Bubble