The Man Who Saw The Crash Coming

The financial crash in 2008 came as a surprise to most economists. The believed markets were sufficient and will produce prosperity for all if left to their own devices. However one little known economist had predicted it and developed a theory explaining it. He devised a theory explaining how lenders become lax with their standards, over optimistic and over extend themselves leading to a crash. Even more impressively he did this back in the 70s and 80s so can’t be accused of jumping on the bandwagon. His name is Hyman Minsky (1919-1996) and the theory is called “The Financial Instability Hypothesis”. Continue reading “The Man Who Saw The Crash Coming”

The Nonsense Of The Efficient Market Hypothesis

There is an absurd theory that is so unrealistic that it is bizarre that anyone actually believes it. It views the stock market as a perfect place of logic and reason where nothing can go wrong. It ascribes stock traders with the powers and knowledge of a God. The fact that so many believed in it was a major cause of the recent asset bubble and financial crash. It is known as the Efficient Market Hypothesis.

To enter the world of the efficient market hypothesis you must leave your brain at the door. The theory assumes Continue reading “The Nonsense Of The Efficient Market Hypothesis”