Thursday, October 23, 2008

Greenspan Shocked

Alan Greenspan is shocked, and can't figure out why banks did not act to protect their shareholders.

"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity – myself especially – are in a state of shocked disbelief."

Probably I don't know enough to understand what he's shocked about. But even when people are acting in their self-interest, they make mistakes. Especially when "everyone else" is making the same mistake. Bubbles and panics are examples of that.

Bubbles are trouble
and panics are double.

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