This Time is Different

Catherine Rampell’s article “Same Old Hope: This Bubble is Different” in today’s New York Times echoes a theme I raise in Globaloney 2.0, where I break down all the reasons investors and policymakers allowed themselves to be fooled — to believe that “this time” was really different.

In my new book I argue that we need once and for all to learn the lessons that financial bubbles are a fundamental characteristic of financial markets — this time is no different from all the times before. Rampell’s article suggests that this lesson is very hard to learn, however.  Here’s a brief quote. Click on the link above to read the complete article.

“Globally, a lot of money is now seeking higher returns once again,” said Rachel Ziemba, senior analyst at RGE Monitor. The steadying of the economy, liquidity injections by governments and big returns reaped early this year by investment banks are encouraging more traders to dip their toes back in the water in search of the next big thing.

“As long as compensation and bonuses are based on short-term performance in the market,” she said, “that’s going to encourage risk-seeking behavior.”