Martin Wolf treffer spikeren på hodet: Financial markets, and particularly the big players within them, need fear. Without it, they go crazy. Kapitalister oppfører seg som sosialister og roper på intervensjon. La dem gå over ende, skriver Wolf og beskriver stadiene i en bobl-syklus.

This is not new. It is as old as financial capitalism itself. The late Hyman Minsky, who taught at the University of California, Berkeley, laid down the canonical model. The process starts with «displacement», some event that changes people’s perceptions of the future. Then come rising prices in the affected sector. The third stage is easy credit and its handmaiden, financial innovation.

The fourth stage is over-trading, when markets depend on a fresh supply of «greater fools». The fifth stage is euphoria, when the ignorant hope to enjoy the wealth gained by those who came before them. The warnings of those who cry «bubble» are ridiculed, because these Cassandras have been wrong for so long. In the sixth stage comes insider profit-taking. Finally, comes revulsion.

In the latest cycle, displacement began with the huge cuts in interest rates in the early 2000s, which drove up prices in housing. The easy credit was stimulated by innovations that allowed those making the loans to regard their service as somebody else’s problem. Then people started to buy dwellings to resell them, not live in them. Subprime lending was a symptom of euphoria. So, in a different way, was the rush of bankers into hedge funds and of the wealthy and big institutions into financing them. Then came profit-taking, falling prices and, last week, true revulsion.

This was what George Magnus of UBS bank calls a «Minsky moment» . It was the moment when credit dried up even to sound borrowers. Panic had arrived.

Sentralbankenes oppgave er å redde markedet, ikke en overoptimistisk, dumdristig, grådig investor, skriver Wolf. De bør intervenere, men ellers la de enkelte aktører blø.