John Mauldin, in his Feb. 18, 2005 letter, quotes the economist Hyman Minsky, who said "Stability is unstable."
What he meant by that is that the longer things remain the same, the more we expect them to remain the same and the more complacent we get. Thus, when things actually do change, the shock is much greater.Alan Greenspan said something similar to Congress recently:
People experiencing long periods of relative stability are prone to excess. We must thus remain vigilant against complacency.People keep expecting housing prices to only go up. The Japanese expected the same thing of real estate prices around Tokyo in the 1980s. The stability in prices (not just in real estate) and general economic conditions is not some new law of the world. Things will change, and when the stability ends (blows up?), it will wreak havoc in many people's lives. Posted by Tom Nugent at April 11, 2005 11:39 PM