abandoned office

It’s Quiet…. Too Quiet

14.09.2016 • Investing

From Felipe Miranda – Daily Pro (Brazil) –

Do You Want a Moderate Financial Life?

Every time we approach the 15th of September, I instinctively remember the collapse of the Lehman Brothers. It’s been eight years. It does not matter how much time has gone by. Absence is that strange thing you really never get over. Just try to get used to. Impossible to forget. Eight years later and we have learned nothing.

Just before the housing crisis in the US in 2007/8, we lived during a period called, the Great Moderation. Supposedly, theory and economic policy reached a level that would ensure little variation of the main macroeconomic variables. Low volatility of inflation, GDP and unemployment rates. So it was, amen.

We suppressing volatility, hiding risks fueling bubbles until, suddenly, boom! The world ended just when everyone thought it was completely calm. “This hill is very quiet, yes this hill is very quiet,” concerned Baiano just minutes before the arrival of Captain Nascimento. The Elite Squad had compressed the volatile slum to fake calmness.

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