Regulators struggle to contain the excesses of financial euphoria from "summary" of A Short History of Financial Euphoria by John Kenneth Galbraith
Regulators are those who are expected to maintain the stability of the financial system. They are tasked with ensuring that the excesses of financial euphoria do not lead to disastrous consequences for the economy. However, history has shown that their efforts are often ineffective in containing the irrational exuberance that characterizes these periods. During times of financial euphoria, investors tend to throw caution to the wind and engage in speculative behavior. This can lead to asset bubbles, where prices become detached from their intrinsic value. Regulators are aware of the risks posed by such bubbles, but their attempts to intervene are often met with resistance from those who are profiting from the boom. One of the challenges faced by regulators is the difficulty of identifying when a market has become overheated. Financial markets are complex and ...
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