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Despite their collective expertise, markets are apparently destined to repeat history as irrational exuberance is followed by equally irrational despair. Periodic bouts of economic chaos are the inevitable result.

Financial crises have been an unfortunate part of the industry since its beginnings. Bankers and financiers readily admit that in a business so large, so global, and so complex, it is naive to think such events can ever be avoided. A look at a number of financial crises over the last 40 years suggests a high degree of commonality: excessive exuberance, poor regulatory oversight, dodgy accounting, herd mentalities, and, in many cases, a sense of infallibility.

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