The Minsky Moment
http://www.newyorker.com/talk/comment/2008/02/04/080204taco_talk_cassidy
There are basically five stages in Minsky’s model of the credit cycle: displacement, boom, euphoria, profit taking, and panic.
- John Cassidy
Can it happen again? My view is financial markets are frequently dyed, coated and fracture-filled, whenever there is a crisis. Even today the so-called gurus of the financial world have difficulty interpreting the linkages between the financial markets and the economy. The Minsky effects are inevitable in a free market economy. What's shocking to me is that the regulatory institutions and the goverment have no functional tools/mechanisms to respond quickly. They are in state of momentary autism, really. We are paying for it dearly, forever. Thank you John for the insightful essay.
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