Markets seem to be driven by stories, as I emphasize in my book Irrational Exuberance. There are stories of great new eras and of looming depressions.

Then credit dries up and the economy collapses. This vicious downward spiral for business confidence typically features phishes for example, the victims of Bernard Madoff s Ponzi scheme discovered only after the period of irrational exuberance has ended.

China s End of Exuberance

Should such irrational exuberance force the government, willy nilly, to curtail public investment? Does this mean that government must decide which capital flows say into real estate investment, for example are bad, and so must be taxed or otherwise curbed?

Speculative pressures are likely to have been at work, influencing the decisions of OPEC and many others. Although changes in market psychology are difficult to understand, the broad concerns that underlie such episodes of irrational exuberance are almost always clear.

This was the same Greenspan who in 1996 warned of irrational exuberance and, then, as Fed chairman, did nothing to check it. Both the phrase and his lack of action make sense in the light of his (now shattered) intellectual system.

Warnings about irrational market exuberance were largely ignored, especially as US consumer spending helped fuel strong growth across the global economy. Robust exports from Japan and Europe supported economic recovery and steadied investor confidence, providing, in turn, further export opportunities for newly industrializing countries, most notably China.

But, in many cases, inflows are driven by short term factors, fads, and irrational exuberance, which can lead to an overvalued currency, the crowding out of non traditional export sectors or import competing sectors, a loss of competitiveness, and eventually a large current account deficit and thus tighter external constraints on growth.

So, completely irrational, you would think.

PARIS The bailout of the financial system was a bizarre moment in economic history, for it benefited those who benefited most from the markets irrational exuberance the bosses of financial firms. Before the crisis hit, however, redistribution of wealth (and the tax and social security payments that make it possible) was considered the biggest obstacle to economic efficiency.

PARIS The bailout of the financial system was a bizarre moment in economic history, for it benefited those who benefited most from the markets irrational exuberance the bosses of financial firms. Before the crisis hit, however, redistribution of wealth (and the tax and social security payments that make it possible) was considered the biggest obstacle to economic efficiency.

Also, thou shalt not disregard the irrational.

You might say, eh, that's not really irrational.

Shorting a stock is difficult and risky it is difficult because borrowing stocks is hard to do, and it is risky because shorting has limited upside but infinite downside. In other words, the traditional securities available to investors make it easier to bet in favor of a company than against it, causing prices to be affected more by irrational exuberance than by panics.

International money flows aside from inflows into the US are not yet at levels associated with irrational exuberance, but there is still time for that to happen before interest rates start to rise. This is an alarming prospect, because if there is one lesson from the 1990's, it is that nobody should overestimate the stability of international financial flows.

As I argued last year, in the second edition of my book Irrational Exuberance , the boom is rooted in speculative investment by ordinary homebuyers, fueled substantially by the worldwide perception that capitalism has triumphed, and that all people must look out for themselves by acquiring property. Convinced that private ownership has become essential to smart living, buyers bid up home prices.

I'll tell you a little bit about irrational behavior.

Laurie Santos A monkey economy as irrational as ours

I will tell you a little bit about irrational behavior.

However, they have reached irrational levels under the current administration.

You can argue that neither group should have boosted its spending to such a degree that both were subject to irrational exuberance and that someone should have taken away the punchbowl earlier. But you cannot argue that these groups did not increase their spending, and that their increased spending did not pull large numbers of Americans roughly two million in each case into productive and valued employment.

If you believe that the crisis was caused by a shortage of liquidity, we had plenty of models analyzing liquidity shortages and their effects on financial institutions. If you believe that the blame lies with greedy bankers and unthinking investors, lulled by the promise of a government bailout, or with a market driven crazy by irrational exuberance, we had studied all this too, in great detail.

But they also do some of the irrational things we do.

I'll give you a couple of more examples on irrational decision making.

And my interest in irrational behavior started many years ago in the hospital.

My fellow environmentalists, on this subject, have been irrational, anti scientific, and very harmful.

Little wonder, then, that we are now witnessing a significant correction in equity, credit, and commodities markets. The irrational exuberance that drove a three month bear market rally in the spring is now giving way to a sober realization among investors that the global recession will not be over until year end, that the recovery will be weak and well below trend, and that the risks of a double dip W shaped recession are rising.

It's a strange exuberance about materials, about the world a fascination that I think the world needs quite very much right now.

But it's this irrational view of things that drives us on to the next thing.

We call it mycophobia, the irrational fear of the unknown, when it comes to fungi.

The reason this is irrational is that we've given people in both situations the same choice.

Then again, who's to say that certain types of irrational thinking aren't exactly what the world needs?

No. Contrary to what's usually said, testability is common, in myths and all sorts of other irrational modes of thinking.

As far back as I can remember, I was enchanted by the natural beauty of that region and the almost tropical exuberance of the plants and animals that grow there.

In my own life, I shall always be grateful for having found a form of play in my irrational love of baseball.

The remarkable thing to us is that, when you give monkeys this choice, they do the same irrational thing that people do.

Every time we make irrational demands, exhibit irresponsible behavior or display any other signs of being normal American citizens, we are called childish.

So, if you ask Indians whether their governance is marked by widespread corruption, they will answer with gusto yes! But their exuberance biases India s global ranking relative to more empirically minded countries.

What makes the situation in Gaza even more infuriating is that the status quo is actually irrational. It is not in anyone s political interest.

But maybe they have another faculty, something else that would seem equally irrational to us, but they actually tap into some great possible value there.

Actually, HIV's about sex and drugs, and if there are two things that make human beings a little bit irrational, they are erections and addiction.

In China, the widespread euphoria about the economy is reason for concern. Some universal human weaknesses can result in irrational behavior during an economic boom.

But depression in the construction sector and unemployment among its ex workers would be balanced by exuberance in the manufacturing sector, rising prices for manufactured goods, and long hours and high wages for manufacturing workers

Though when the Dodgers abandoned us to come to L.A., I lost faith in baseball until I moved to Boston and became an irrational Red Socks fan.

That requires listening as well as speaking. It means sticking to principles, but also attempting to understand the other side, however irrational or intransigent it may sometimes appear.