I would be lying, however, if I claimed that I could always formulate worthwhile hypotheses on the basis of my theoretical framework. Sometimes there were no reflexive processes to be found; sometimes I failed to find them; and, what was the most painful of all, sometimes I got them wrong. One way or another, I often invested without a worthwhile hypothesis and my activities were not very different from a random walk.

The trouble with institutional investors is that their performance is usually measured relative to their peer group and not by an absolute yardstick. This makes them trend followers by definition.

The eurozone status quo is neither tolerable nor stable. Mainstream economists would call it an inferior equilibrium; I call it a nightmare - one that is inflicting tremendous pain and suffering that could be easily avoided if the misconceptions and taboos that sustain it were dispelled.

If the bubbles contain a misconception, as they always do, then it can't be maintained forever.

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.

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.

America needs to follow the policies it has introduced in Germany. We have to go through a certain de-Nazification process.