"As a protection against financial illusion or insanity, memory is far better than law"
The words of JK Galbraith in his seminal book, The Great Crash 1929, quoted above, are as poignant now as they were when written in 1954. The post-war boom was in full flow then and the regulations that governed financial institutions were relatively conservative – certainly more restrained than during the roaring twenties.
No doubt some new academic will look back at the recent period of speculation and ponder whether memories of previous bouts of boom and bust should have prevented the sub-prime bubble. The myopia that afflicted so many participants and regulators regarding sub-prime suggests that memories rapidly fail. One year ago...
