The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike.

The assumption of perfect knowledge is very far from reality ... a lot of the evil in the world is actually not intentional.

Giving government aid to a bank basically transforms it into a utility. The huge salaries in this sector are only a symptom of a more profound misalignment. The profitability of the finance industry has been excessive. [...] That was absurd.

Once a trend is established it tends to persist and to run it’s full course.

Every bubble consists of a trend that can be observed in the real world and a misconception relating to that trend. The two elements interact with each other in a reflexive manner.

The only thing that could hurt me is if my success encouraged me to return to my childhood fantasies of omnipotence - but that is not likely to happen as long as I remain engaged in the financial markets, because they constantly remind me of my limitations.

Hedge funds are a very efficient way of managing money. But there are clearly some risks. Hedge funds use credit and credit is a source of instability. Transactions involving credit should be regulated.