Imagine for a moment a market for investments that has reached some sort of equilibrium, where investment flows are consistent with the information known to and expectations held by the market's participants. According to Minsky and Kindleberger, financial crises can appear and then develop through the following stages. Displacement in this sense of change that affects expected profits happens all the time, of course, and seldom leads to panic, crisis, or instability of any sort. Speculative objects appear and disappear with great frequency in financial markets, seldom creating panics or crises. So speculation and crisis may be related, but they are not the same phenomenon.
Expansion is a necessary pre-requisite for a financial crisis to rise out of a speculative episode.
Expansion is the stage where the boom is fed by an increase in liquidity, which provides the means for the boom to grow, perhaps becoming a bubble. Although Kindleberger focuses on increases in bank credit as a common source of expanding liquidity, there are many potential sources. Financial innovations, increased leverage, margin buying, and other techniques can stretch more buying power from a given monetary base. Walter Bagehot, the great 19th Century political economist, suggested that panics formed when an object of speculation attracts the greed of authors, rectors, and grandmothers. The purpose of buying is to sell and take a capital gain as the price rises up and up.