Experts Knew What Went On, by Arnold Kling
Until quite recently, very few people were aware of credit default swaps, collateralized debt obligations, structured investment vehicles and other financial innovations. Even well-informed citizens, journalists and Capitol Hill staffers learned about these financial instruments and financial relationships only when those innovations had brought the system to the brink of disaster.
It is natural to assume that regulators were equally unaware of these financial instruments and these financial relationships. The inclination is to think that these were dangerous schemes cooked up secretly by Wall Street while the regulators weren’t looking. However, a review of the history of the past few decades shows that regulators were aware of these innovations. They approved of these innovations. They collaborated with banks in constructing these innovations. And they applied pressure and provided incentives to banks to use these innovations.
The asymmetry between boom and bust, by Arnold Kling
Booms are longer and relatively gradual, while busts are sudden… it ought to be harder for the economy to adjust to a bust than to a boom.
From the comments: This follows from the second law of thermydynamics: creating a complex structure is difficult, whereas destroying one is much easier.
My comment: a wave at sea grows slowly and smoothly but breaks quickly and with turbulence at the shore; animals come out of their holes slowly and gradually but get back inside quickly if there are signs of predators.
Un keynesiano contra Keynes, por Juan Ramón Rallo