Infectious Exuberance

Many culprits have been fingered for many of the current problems we are facing - from the housing crisis, gas drama to the sinking of the Wall Street ship: unscrupulous mortgage lenders, dishonest borrowers, underregulated financial institutions. And all of them played a role. But too little attention has been paid to the most fundamental cause, the same one that was at the root of the many booms and busts that we've witnessed and experts have chronicled years ago: the contagious optimism, seemingly impervious to facts, that often takes hold when prices are rising. Bubbles are primarily social phenomena; until experts and economists understand and address the pyschology that fuels them, they're going to keep forming.