A new non-profit organization called The Global Center for the Study of Speculation (GCSS), has been launched to “find a cure” for economic bubbles and prevent their potentially devastating effect on individual and institutional investors, as well as the global economy.  

The center aims to sponsor scholarly research to examine and understand the ways in which speculative bubbles form and develop. The GCSS expects to link to major business schools in the U.S. and internationally.  An initial objective will be to develop predictive “early warning signs” so that investors can either protect themselves against devastating losses, or realistically participate in the gains without being blindsided.

The Big Gamble, co-authored by GCSS founder Jose Roncal, describes, in broad terms, certain early warning signs of speculative bubbles. A definitive “early warning system,” however, calls for further research and development. A portion of the sales of each copy of The Big Gamble is being earmarked to fund this important effort.

“We expect to produce and publish an Index that tracks bubbles by industry and market segment,” Roncal says. “By publishing articles in the business and investment media, scholarly journals, white papers and books, we will educate the public about how to spot early warning signs as well as the true risks involved in investing and speculating.”

As part of its outreach campaign, the GCSS will sponsor or participate in symposia, conferences, seminars or similar events related to fulfilling its mission. “We look forward to being on the forefront of a movement that brings the latest thinking and academic research to interested investors or speculators,” Roncal continued. “This is an ongoing effort to promote a better understanding of how financial bubbles form so that the public will be better informed.”

It seems that developing an early warning system is an idea whose time has come.

On October 15, U.K. Prime Minister Gordon Brown called for an overhaul of global financial regulation and an `”early warning'' system to prevent banking crises.  Brown authored the British bank-bailout plan that was copied across Europe and in the U.S.

See story: Brown Seeks Global ‘Early Warning’ System on Crises

While Brown urges a strengthening of the International Monetary Fund and better monitoring of global companies and banks, the GCSS would have a broader scope.  By creating an Index that tracks bubbles by industry and market segment, GCSS’s research and early warning system would also cover real estate, stocks, oil and other commodities.

Federal Reserve Chairman Bernanke also stressed the importance of taking a proactive stance on preventing financial bubbles before they form. On October 16, in an article entitled Bernanke Foreshadows End to Fed's Hands-Off Approach to Bubbles, he signaled an end to the Fed's decades-old aversion to interfering with asset-price bubbles as the financial crisis reshapes some of the central bank's most firmly held views on regulation and monetary policy.

For information about the Global Center for the Study of Speculation, contact Executive Director John T. Hiatt at 212-631-4234 or This e-mail address is being protected from spambots, you need JavaScript enabled to view it