Markets Are Less
Stable Than They Seem by Satyajit Das
Das notes:
“Since 2009, as
policy makers have sought to return the global economy to normal,
"stability" has usually been their byword. Unfortunately, their actions
have only created a false calm -- a "stable instability," to coin a
paradoxical phrase. Although a repeat of the financial crisis has so far been
avoided, this relative tranquility has had the effect of derailing normal
market mechanisms, thereby masking a worrisome accumulation of risks.
Stable instability
creates the illusion of normality, obscuring dangers hidden behind the
apparently stationary and familiar. It's analogous to a person who shows no
obvious symptoms of an as-yet-undetected terminal disease. In this state, the
same arguments can be used to rationalize contradictory events and different
arguments used to reconcile identical facts.”
Related: After Dow 25,000, the Party Has to End. But
When