Denial and insanity are next door neighbors

Via FT:

We will never be able to anticipate all discontinuities in financial markets. Discontinuities are, of necessity, a surprise. Anticipated events are arbitraged away. But if, as I strongly suspect, periods of euphoria are very difficult to suppress as they build, they will not collapse until the speculative fever breaks on its own.

Mr. Greenspan left out a very important point…the one about him touting the merits of adjustable-rate mortgages at the peak of the “euphoria.”