Re: Free Market
No. Crashes are not the result of irrationality or lack of self interest. Players bet the bubble because because, even knowing it is a bubble, the players still feel it will go higher.
Now, you might argue that they are incorrect about some underlying principles. However, that is a completely different thing.
They put in brakes in the market to supposedly stop fast slides. However, analysis shows that those stops do nothing because the slides are not based on irrationality that can be cured by taking pauses.
On a short horizon, the overwelming (only?) reason that stops rise or drop is from true or perceived changes in the underlying information that is discounted into the stock price.
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