Of socks and men

It looks as though we are working through a remake of the first Great Crash. Galbraith’s comments about the process ring sadly true today.
The Prime Minister, in the UK, blames this on external events. But his claimed economic success record, of continuous growth, looks hollow today as history shows that it was a boom of the greatest magnitude rather than carefully stewarded economic management. His obsessive avoidance of volatility in the economy has conditioned people to forget risk and the boom followed as banks also forgot about risk. The ratings agencies saw no defaults/risk and therefore predicted no defaults/risk – a classic (and quite catastrophic) confusion of descriptive vs. predictive statistics!