Post by account_disabled on May 1, 2024 20:15:24 GMT -8
The bailouts may be a necessary evil but one must understand that each bailout is an incentive for next recklessness. Only pain is the best teacher. SAMEER KAMAT In economic analyses predictable parameters that revolve around logic and rationale are easier to deal with and analyze as opposed to those that involve a significant amount of subjectivity such as emotion and sentiment.
Apart from the housing and credit crises we might be able to relate the application of Thaler Sunstein s views directly to another area that we are all much more familiar with capital markets where all investors at least in theory are aware of the best practices buy low sell high greed is bad exercise caution in over heated South Africa WhatsApp Number List markets buy rather than sell in a bear market when the valuations are attractive. But many of us have been guilty of discarding these principles especially in extreme scenarios self fulfilling prophecies created and fuelled by our collective intelligence that ironically mocks the very foundations that inspired those best practices. Considering the parallels between the two i.e. capital markets and housing markets it might help to understand how the concepts of choice architecture and libertarian paternalism which incidentally have been in use by organizations and governments for a long time have helped influence such situations.
In a stock market crash when regulators say Keep the faith while of the analysts are screaming Sell now what do you do During financial crises banks and financial institutions often announce that they have enough cash reserves to avoid a liquidity crunch. However in a situation where the general public sentiment is so overwhelmingly biased against the system neither nudging nor pushing can make a real impact. There s plenty for us to learn from history. A few elements that could make a difference in the housing and credit crises timing aligned interests across the board and one common master plan for coordinated nudging.
Apart from the housing and credit crises we might be able to relate the application of Thaler Sunstein s views directly to another area that we are all much more familiar with capital markets where all investors at least in theory are aware of the best practices buy low sell high greed is bad exercise caution in over heated South Africa WhatsApp Number List markets buy rather than sell in a bear market when the valuations are attractive. But many of us have been guilty of discarding these principles especially in extreme scenarios self fulfilling prophecies created and fuelled by our collective intelligence that ironically mocks the very foundations that inspired those best practices. Considering the parallels between the two i.e. capital markets and housing markets it might help to understand how the concepts of choice architecture and libertarian paternalism which incidentally have been in use by organizations and governments for a long time have helped influence such situations.
In a stock market crash when regulators say Keep the faith while of the analysts are screaming Sell now what do you do During financial crises banks and financial institutions often announce that they have enough cash reserves to avoid a liquidity crunch. However in a situation where the general public sentiment is so overwhelmingly biased against the system neither nudging nor pushing can make a real impact. There s plenty for us to learn from history. A few elements that could make a difference in the housing and credit crises timing aligned interests across the board and one common master plan for coordinated nudging.