In the past three months we have seen financial consequences that are magnified ten times.
The so-called 'sub-prime mortgage crisis' in the United States and to a lesser extent in Britain was based on bond rating bureaus finding that $100 billion in mortgage loans had been at greater risk than the lenders who made the loans, believed. Nevertheless, the maximum extent of the possible risk, if every person with weak credit defaulted on their mortgage and the market value of the underlining home dropped to half, was less than $100 billion dollars.
Yet in the face of this $100 billion number, the stock markets of the world declined by ten times that amount: $1 trillion.
I just wanted to point that out. I don't know the reason for such exaggerated volatility.