Misreading the Lessons From Financial Crises – NYTimes.com.
“There are good crises and there are bad crises. Every crisis breaks a deadlock and sets events in motion. It is either a disaster or an opportunity. A bad crisis is one in which no one has the power to make good use of the opportunity and therefore it ends in disaster. A good crisis is one in which the power and the will to seize the opportunity are in being. Out of such a crisis come solutions.”
— Walter Lippmann,
March 7, 1933
The world has experienced one financial crisis after another over the last few decades — runaway inflation, the stock market crash of 1987, the East Asian crisis of the late 1990s, the popping of the dot-com bubble in the face of accounting scandals and, finally, the crisis that led to the Great Recession.
And yet, at least according to the stock market, these have been the golden years. Never have United States stock prices done so well during a 36-year period as they have since 1978.
That one fact is an indication that the world has, on balance, handled the crises well enough — or at least that investors now believe that to be true. This column, which will conclude next week as I end a 26-year career at The New York Times, is an attempt to evaluate those crises and how they were sometimes misunderstood in ways that came back to haunt the world years later.
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