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.