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Satyajit Das

Markets Are Less Stable Than They Seem

Central banks have created the illusion of calm. It won't last.
Enjoy it while it lasts.

Enjoy it while it lasts.

Photographer: Spencer Platt/Getty Images

Since 2009, as policy makers have sought to return the global economy to normal, "stability" has usually been their byword. Unfortunately, their actions have only created a false calm -- a "stable instability," to coin a paradoxical phrase. Although a repeat of the financial crisis has so far been avoided, this relative tranquility has had the effect of derailing normal market mechanisms, thereby masking a worrisome accumulation of risks.     

Stable instability creates the illusion of normality, obscuring dangers hidden behind the apparently stationary and familiar. It's analogous to a person who shows no obvious symptoms of an as-yet-undetected terminal disease. In this state, the same arguments can be used to rationalize contradictory events and different arguments used to reconcile identical facts.