Bubble Psychology and Lessons from History

"The rally reignited hope and spawned much talk of green shoots of recovery. We saw a temporary resurgence of confidence, which brought with it a corresponding resurgence of liquidity, which slowed the worsening of the fundamentals. With the rally over we can expect confidence to leach away, and liquidity to contract sharply as a result. However, mainstream commentators and political leaders will continue to speak of green shoots of recovery all the way down. This is an established pattern of denial, as a closer look at history will show."