Vancan

Asset Securitization Crisis: The Butterfly Effect

The butterfly effect is an overused analogy, to wit: As is seldom pointed out, the butterfly/weather analogy only applies (if it applies at all) to systems that are really unstable. A butterfly's flapping wings are not likely to cause a flood in the Sahara or even in the typical rain shadow. And, as Wikipedia points out in the opening paragraph, the butterfly's flapping wings may also PREVENT a tornado in an unstable weather system.

The butterfly cannot change the stability of the system. In our case, poor Bernanke and Poulson have just that job. As far as I know, it is not their fault that the philosophy adopted by Greenspan allowed (or caused) our financial system to badly destabilize. It is Ironic that his policies resulted in the withholding of capital from our corporations. What would Ann Rand say, now that it is poring in the Sahara?