From The Chicago Tribune:
There are remarkable similarities in the events that trigger panics. A century-old economic text, "A Brief History of Panics and their Periodical Occurrence" noted, "The symptoms of an approaching panic… are wonderful prosperity… a rise in the price of all commodities, of land, of houses, etc, etc…, by the gullibility of the public, by a general taste for speculating in order to grow rich at once, by a growing luxury leading to excessive expenditures…." The book further cited excessive leverage in the financial system, a point taken up by [Roger] Babson, who likened the creation of new financial institutions to "putting out a flame by pouring oil over it." How easily all this could have described the years preceding the Panic of 2008!
Read more from Jeff Korzenik's fascinating op-ed, here.
