9 Bizarre Moments in Economic History

5. Adjustable Rate Mortgage, Archduke Ferdinand?

In the 1860s, the rulers of the newly-formed Austro-Hungarian Empire encouraged their bankers to be more free with their lending standards. Their goal was to encourage growth in the empire. The result (this is going to sound eerily familiar) was over-speculation in building, massive default on borrowed funds, and economic collapse throughout Central Europe. The worldwide depression reached all the way to the United States and triggered the Panic of 1873. On the bright side, many of the most beautiful buildings in Europe come from this period of “irrational exuberance.”