Market Prices Are Always Wrong.

Of Course, Speculation Will Always Make A Crisis Worse. If There Is A Weak Point, It Will Expose It.

The Lower Interest Rates Fueled Housing And Consumption Booms In Countries Such As Spain And Ireland. At The Same Time, Germany, Struggling With The Burdens Of Reunification, Tightened Its Belt And Became More Competitive. All This Led To A Wide Divergence In Economic Performance. Europe Became Divided Into Creditor And Debtor Countries.

Financial Markets Are Supposed To Swing Like A Pendulum: They May Fluctuate Wildly In Response To Exogenous Shocks, But Eventually They Are Supposed To Come To Rest At An Equilibrium Point And That Point Is Supposed To Be The Same Irrespective Of The Interim Fluctuations. Instead, As I Told Congress, Financial Markets Behaved More Like A Wrecking Ball, Swinging From Country To Country And Knocking Over The Weaker Ones. It Is Difficult To Escape The Conclusion That The International Financial System Itself Constituted The Main Ingredient In The Meltdown Process.

Once We Realize That Imperfect Understanding Is The Human Condition There Is No Shame In Being Wrong, Only In Failing To Correct Our Mistakes.

The Financial Markets Generally Are Unpredictable. So That One Has To Have Different Scenarios... The Idea That You Can Actually Predict What's Going To Happen Contradicts My Way Of Looking At The Market.