Friday 17 Aug 2018 | 13:49 | SYDNEY
Friday 17 Aug 2018 | 13:49 | SYDNEY

Thought for the day: Recovering from crisis


Sam Roggeveen


16 March 2009 11:19

From a newly-discovered blog called The Frontal Cortex:

The current economic crisis is a by-product of collective failure, an example of terrible decision-making on a huge scale. Banks gave out loans to people who shouldn't have taken them, consumers got used to spending money they didn't have, regulators failed to regulate, and investors, appeased by ephemeral profits, failed to ask hard questions.

In retrospect we can see the profound foolishness of this behaviour. Yet it's worth remembering that this is not the first time that the markets have gone haywire. The history of finance is largely a history of financial bubbles, from the tulip mania of 17th-century Holland to the South Sea Bubble of 18th-century England. Do we never learn? And, if not, why not?

The only consolation in this paragraph is the phrase 'in retrospect'. What I mean is, as stupid as we collectively tend to be and as little as we learn, at least we survive to try again. And therein lies the best argument for nuclear disarmament — given how prone to error we collectively are, it is foolish in the extreme to put ourselves in a situation from which, potentially, we can never recover.