James Picerno submits:
"All bubbles burst when risk aversion reaches its irreducible minimum," former Fed chairman Alan Greenspan writes in a new paper—"The Crisis"—for the Brookings Institution. That minimum, he advises, arrives with "credit spreads approaching zero, though analysts’ ability to time the onset of deflation has proved illusive."
Is the maestro rethinking his long-held stance that central banks shouldn’t try to address bubbles? Not necessarily, although he leaves room for debate. "Some bubbles burst without severe economic consequences, the dotcom boom and the rapid run-up of stock prices in the spring of 1987, for example," he advises, adding: