Wednesday, July 14, 2010

Correcting a Misunderstanding

I realized that I have completely misunderstood a recent reader question: Whereas the reader was asking about how banks failed their stress tests in the 2007-2008 crisis, I was thinking about the Eurozone stress tests, as my mind has been kind of fixated on that for the last few days.

Anyway, I see that crisis a mainly an incentive and irrationality problem- basically, noone had any incentive to case; for the interested, I highly recommend Gillian Tett's book on the crisis. A recent article pushes this case even further by arguing for vested interests as the main culprit of the crisis.

As for the Eurozone stress tests, I plan to write on that, either in Turkish for a magazine or in English for the blog.

No comments: