I’ve posted Entry #201 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller Doesn’t Dare Say What He Believes Is the True Cause of the Economic Crisis.
Juicy Excerpts: Samuelson hints at the true cause of the crisis without quite becoming so bold as to identify it bluntly.
He tells us: “We were victims of success. The crisis originated from 25 years of prosperity, from roughly the end of 1982 to the end of 2007. This conditioned people — bankers, regulators, economists, almost everyone — to take stable growth for granted. The longer the prosperity continued, the more it inspired the risky behaviors that ultimately wrecked the economy. These included over-borrowing by consumers and financial institutions, housing speculation and loose regulation. The ‘causes’ cited by left and right were usually the consequences of a delusional mind-set: a belief that once-risky practices were prudent in a world of near-perpetual prosperity.”??It all began in 1982, huh? I wonder if there was anything relating to the stock market that began in 1982? I have a feeling that that might be the case. The words are on the tip of my tongue. I just cannot quite bring the thought to mind.
That phrase “delusional mind-set” might be a clue. It reminds me of a similar phrase. Irrational Something or Other. Again, I just don’t seem to be able to pin it down. Some sort of unease about saying the words out loud is holding me back.