A third lesson, big banks are stuck with hundreds of billions in bad real estate loans. That’s also happened before, in the 1980s savings and loan crisis. Back then, everybody had to learn that the best way to unravel bad credit was fast. Yet once again we’re hearing prominent politicians urging rate freezes and foreclosure moratoriums, postponing the inevitable at great cost.
We like to think that we get smarter as we get older, and that society makes intellectual progress from year to year — not on present evidence. It would be bad enough if we did not know better. It’s worse. We have unlearned what we do know.