Re: Free Market
To what extent do people buying bubble assets realise they're in a bubble? I'm not sure it's very much. For example in the dotcom model you got all sorts of people arguing sincerely that the economic model had changed forever, that firms that wouldn't amke a profit for years or decades could be worth billions, that the Dow was going to rise indefinitely becuse of the efficiencies made available by technology etc etc. You also of course got unscrupulous people pushing those shares. Part of the problem is that in the short term, people think they're acting self-inetestedly but they're either deluded or deceived. (Of course that happens every day to individuals, but I mean broadly as a whole). Then the long term gives them a kick on the jimmies, but eventually they forget about it.
|