The Financial Revolution
Neither a borrower nor a lender be; For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry.
—Oft-quoted speech by Polonius, possibly the most misguided character in Shakespeare
AFTER THE BURSTING of the property and credit bubbles, it became an article of faith that the change in attitudes to risk in the 1990s was a symptom of monstrous greed, stupidity, and incompetence. Equally fashionable was to ridicule the frenzy of property investment, especially in America and Britain, as the most extreme and deluded example of “irrational exuberance” in history. But much of the buildup in credit was fundamentally justified and irreversible. It was, in fact, a rational response to ...