History demonstrates that participants in financial markets are susceptible to waves of optimism. Excessive optimism shows the seeds of its own reversal in the form of imbalances that tend to grow over time.

The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War.

The need for values is inbred. Their content is not.

By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives.

Even though some down payments are borrowed, it would take a large, and historically most unusual, fall in home prices to wipe out a significant part of home equity. Many of those who purchased their residence more than a year ago have equity buffers in their homes adequate to withstand any price decline other than a very deep one.

The process of innovation is, of course, never ending.

Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices, ... This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.