Crises share two things..

Writing in the Weekend FT Gillian Tett looks at (financial) crises old and new and what they share.

First, the pre-crisis period is marked by hubris, greed, opacity and tunnel vision…that makes it impossible to assess risks.

Second, when the crisis hits, there is a sudden loss of trust, among investors, governments, institutions or all three.

Remember that that the roots of the word “credit” comes from the Latin, “credere”, meaning to believe; finance does not work without faith.

The irony is that too much trust creates bubbles that (almost) inevitably burst.

Wise words indeed.

 

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