Five years on from Lehman Brothers’s collapse and “where did it all go wrong?” analysis is all the rage. Answers have varied: poor regulation, malicious bankers, dozy politicians, greedy homeowners, and so on.
But what if the answer was in our minds? New research suggests that market bubbles are in fact driven by a biological impulse to try to predict how others behave. Any analysis of the global financial crisis would be incomplete without a thorough understanding of the asset bubble that preceded it. In the run up to 2008, property prices hit dizzying levels, construction boomed and the stock market reached a record high.
Via Emre Erdogan