Mega-reader George has pointed to a study called “This Time is Different: Eight hundred years of financial folly” by Carmen M. Reinhart and Kenneth Rogoff which builds a broader historical context for analysing financial crises.
In a very interesting reading the authors through their “archeological” research conclude that crises “… [are] never different”. Whether it is the 1720’s South Sea bubble, or the 80’s stock market collapse, or today’s sub-prime loans and real estate bubble, there is always going to be investors, borrowers and lenders that think there is something in the horizon that sets them apart from any valuation law, that there are opportunities to take advantage “without” risk or cost.
Not being an economist, this study straighten several things out for me. If you want the whole [125 pages] thing click here.
