I was wondering about this the other day when I was being flattered by a NY state official pal of mine for Canada's stability. Is it possible that periodic managable bubbles are an important part of wealth creation:

In 2004, Alan Greenspan, then the chairman, said the rise in home values was “not enough in our judgment to raise major concerns.” In 2005, Mr. Bernanke — then a Bush administration official — said a housing bubble was “a pretty unlikely possibility.” As late as May 2007, he said that Fed officials “do not expect significant spillovers from the subprime market to the rest of the economy.” The fact that Mr. Bernanke and other regulators still have not explained why they failed to recognize the last bubble is the weakest link in the Fed’s push for more power. It raises the question: Why should Congress, or anyone else, have faith that future Fed officials will recognize the next bubble?

We have minor mini bubbles all the time. Bankruptcies occur every year. They represent over investment in an idea that didn't pan out. Does anyone think that the credit default swap wasn't a massive error as opposed to the playing out of evil in the marketplace? Wasn't it an act of massive and ill-placed hope? Doesn't every bubble economy start with the swell of an overture rather than a hooded figure in a dark room rubbing his hands and cackling?

In other news, well played Mr. Page.