Tuesday, September 22, 2009


Why Capitalism Fails, by Stephen Mihm:

Modern finance, [Hyman Minsky] argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse...Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff...

As Minsky observed, “Success breeds a disregard of the possibility of failure.”

Not entirely surprising, is it? Remember LTCM?

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