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Economies dominated by hedge financing—that is, those with strong cashflows and low debt levels—are the most stable. When speculative and, especially, Ponzi financing come to the fore, financial systems are more vulnerable. If asset values start to fall, either because of monetary tightening or some external shock, the most overstretched firms will be forced to sell their positions. This further undermines asset values, causing pain for even more firms. They could avoid this trouble by restricting themselves to hedge financing. But over time, particularly when the economy is in fine fettle, the temptation to take on debt is irresistible. When growth looks assured, why not borrow more? Banks add to the dynamic, lowering their credit standards the longer booms last. If defaults are minimal, why not lend more? Minsky’s conclusion was unsettling. Economic stability breeds instability. Periods of prosperity give way to financial fragility.

Minsky’s insight might sound obvious. Of course, debt and finance matter. But for decades the study of economics paid little heed to the former and relegated the latter to a sub-discipline, not an essential element in broader theories.

Minsky was a maverick. He challenged both the Keynesian backbone of macroeconomics and a prevailing belief in efficient markets.

t Messrs Hicks and Hansen largely left the financial sector out of the picture, even though Keynes was keenly aware of the importance of markets. To Minsky, this was an “unfair and naive representation of Keynes’s subtle and sophisticated views”. Minsky’s financial-instability hypothesis helped fill in the holes.

His challenge to the prophets of efficient markets was even more acute. Eugene Fama and Robert Lucas, among others, persuaded most of academia and policymaking circles that markets tended towards equilibrium as people digested all available information. The structure of the financial system was treated as almost irrelevant

In recent years, behavioural economists have attacked one plank of efficient-market theory: people, far from being rational actors who maximise their gains, are often clueless about what they want and make the wrong decisions.

But years earlier Minsky had attacked another: deep-seated forces in financial systems propel them towards trouble, he argued, with stability only ever a fleeting illusion.

Investors were faster than professors to latch onto his views. More than anyone else it was Paul McCulley of PIMCO, a fund-management group, who popularised his ideas. He coined the term “Minsky moment” to describe a situation when debt levels reach breaking-point and asset prices across the board start plunging. Mr McCulley initially used the term in explaining the Russian financial crisis of 1998. Since the global turmoil of 2008, it has become ubiquitous. For investment analysts and fund managers, a “Minsky moment” is now virtually synonymous with a financial crisis.

it would be a stretch to expect the financial-instability hypothesis to become a new foundation for economic theory. Minsky’s legacy has more to do with focusing on the right things than correctly structuring quantifiable models. It is enough to observe that debt and financial instability, his main preoccupations, have become some of the principal topics of inquiry for economists today

As Mr Krugman has quipped: “We are all Minskyites now.”

The British relied almost exclusively on their American counterparts for postwar planning, then failed to deliver the manpower and resources needed to make good on promises to transform Iraq into a functioning, stable democracy.

Yet he stood firm on the question of whether he had deceived the public, saying he had taken the country to war “in good faith,” and that the report had validated his contention that “there were no lies” from his government.

Speaking in the House of Commons, Cameron urged politicians to learn the lessons of the inquiry, the first being that “taking the country to war should always be a last resort.”

The report does not have a direct bearing on the country’s current political chaos, but it is likely to revive for many Britons memories of a rush to war that has come to epitomize betrayal by the nation’s elites. The cynicism of British voters that the Iraq War helped to spawn was on display last month, when many seemed to blithely ignore the warnings of experts that a British exit from the E.U. could spark economic and political chaos.

the reaction in Iraq was relatively muted among people too focused on daily survival to worry about another report documenting the West’s failures in their country. After 13 years of violence, the war to depose Hussein hardly seems worth it even to those who celebrated his fall. world europe Get 2016 Olympics updates by email Our best news and analysis from Rio, delivered to your inbox. post_newsletter333 magnet-olympics2016 true endOfArticle false

Business, the City, workers with jobs to lose and expats living abroad will insist that we retain our current access to the single market and free movement.

Yet the big truth would remain that we have gone through the greatest constitutional crisis since the war to end up pretty much where we were before. Immigration would not fall significantly. The most striking difference would be that we would lose the ability to influence most of the EU laws and regulations our businesses have to follow.

Alternatively we could really leave. Inflation would rise as the pound sunk, jobs would go, and public services and businesses would suffer as immigrant labour abandoned us.

Whatever choice Brexit forces on us, Ukip and forces to its right will prosper. They will be able to say to supporters old and new that they were lied to and betrayed. Either immigrants would still be coming or their grievance-filled followers would be getting poorer.

I cannot imagine better conditions for resentment to rise. A referendum that was meant to let “the people take control” and “restore trust” will have achieved the opposite. You do not need an over-active imagination to picture the threats to the safety of anyone who looks or is foreign that may follow.

after the Sept. 11 attacks, and later after the Madrid and London bombings, we told ourselves that Islam and Islamism had nothing to do with each other. But sadly, they do. The peaceful religion can sometimes serve as a slope into a militant anti-Western ideology, especially when this ideology offers a strong sense of belonging amid the mental discomfort of our postmodern societies.

Belgium’s predicament mirrors Europe’s. Official Europe has worked hard to move past nationalism, so that there is no German or French Dream. But there’s no European Dream, either, not yet. So new migrants have no spirit to tap into, as they do in the United States. Instead, some Muslims find it more attractive to give their loyalty to Allah, their fellow believers or the Islamic State.

A result of this mutual apathy is too many Islamists, and too few police and intelligence officers — particularly in Belgium, but not just there. We may have a common European currency, but we still do not have a common European terrorism database. Islamists in Western Europe seem better coordinated than the European authorities hunting them. 19 Comments

There are serious grounds for the alienation between the German chancellor, Angela Merkel, and her European partners. There are many practical things she can do in response, but also some big-picture steps. She should speak honestly about Europe’s illusions, past and present. She should lead Europe past its outmoded data-protection concerns and push for coordination among security services. And she should make integration and opportunity a common value for everyone in Europe — a European dream that is more appealing to immigrants than any afterlife kingdom could possibly be.

Our foundation of Earth knowledge, largely derived from historically observed patterns, has been central to society’s progress. Early cultures kept track of nature’s ebb and flow, passing improved knowledge about hunting and agriculture to each new generation. Science has accelerated this learning process through advanced observation methods and pattern discovery techniques. These allow us to anticipate the future with a consistency unimaginable to our ancestors.

But as Earth warms, our historical understanding will turn obsolete faster than we can replace it with new knowledge. Some patterns will change significantly; others will be largely unaffected

The list of possible disruptions is long and alarming.

Historians of the next century will grasp the importance of this decline in our ability to predict the future. They may mark the coming decades of this century as the period during which humanity, despite rapid technological and scientific advances, achieved “peak knowledge” about the planet it occupies

One exception to this pattern-based knowledge is the weather, whose underlying physics governs how the atmosphere moves and adjusts. Because we understand the physics, we can replicate the atmosphere with computer models.

But farmers need to think a season or more ahead. So do infrastructure planners as they design new energy and water systems

The intermediate time period is our big challenge. Without substantial scientific breakthroughs, we will remain reliant on pattern-based methods for time periods between a month and a decade. The problem is, as the planet warms, these patterns will become increasingly difficult to discern.

The oceans, which play a major role in global weather patterns, will also see substantial changes as global temperatures rise. Ocean currents and circulation patterns evolve on time scales of decades and longer, and fisheries change in response. We lack reliable, physics-based models to tell us how this occurs.

Our grandchildren could grow up knowing less about the planet than we do today. This is not a legacy we want to leave them. Yet we are on the verge of ensuring this happens.

It’ll be a personality cult, without a hint of optimism, and certainly no overarching governing philosophy

In temperament and judgment, this is now Trump’s party. And take him at his word: His supporters will riot, as he predicted this week, if he doesn’t get his way.

There is no getting around how much Trump’s followers now echo his darkest sentiments. In Tuesday’s exit polls, huge majorities of Trump supporters backed his call to ban Muslims from entering the country, and for rounding up and deporting 11 million illegal immigrants.

This month, members of the Republican national security community issued a strongly worded missive against Trump. They said his trade policies would be a “recipe for economic disaster,” that his embrace of torture was “inexcusable,” that his anti-Muslim campaign would badly damage American interests abroad, and on and on and on.

Where were these people six months ago? Laughing at the orange-haired clown with the rest us. But if this who’s who of Republican foreign policy cardinals is serious about their words, they have no choice but to leave the party this summer. Either that or accept the man who said he got foreign policy advice “speaking with myself.” For him, a glance in the mirror is enough. “I have a very good brain,” Trump said.

Much of Mr. Klarman’s anxiety seems to emanate from Mr. Trump’s leadership style. He described it this way: “The erratic tendencies and overconfidence in his own wisdom and judgment that Donald Trump has demonstrated to date are inconsistent with strong leadership and sound decision-making.”

“While they might be popular, the reason the U.S. long ago abandoned protectionist trade policies is because they not only don’t work, they actually leave society worse off.”

He worries, for example, that Mr. Trump’s stimulus efforts “could prove quite inflationary, which would likely shock investors.”

“Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers,”

“The big picture for investors is this: Trump is high volatility, and investors generally abhor volatility and shun uncertainty,” he wrote. “Not only is Trump shockingly unpredictable, he’s apparently deliberately so; he says it’s part of his plan.”

he warned, “If things go wrong, we could find ourselves at the beginning of a lengthy decline in dollar hegemony, a rapid rise in interest rates and inflation, and global angst.”

he issued a statement after Mr. Trump criticized a judge over his Mexican heritage, saying he planned to support Mrs. Clinton: “His words and actions over the last several days are so shockingly unacceptable in our diverse and democratic society that it is simply unthinkable that Donald Trump could become our president.”

“Despite my preference to stay out of the media,” he wrote, “I’ve taken the view that each of us can be bystanders, or we can be upstanders. I choose upstander.”

“This should give long-term value investors a distinct advantage,” he wrote. “The inherent irony of the efficient market theory is that the more people believe in it and correspondingly shun active management, the more inefficient the market is likely to become.

“In matters of style, swim with the current; in matters of principle, stand like a rock.”

Consider RCR Arquitectes’ choice to run its shop in a town of 30,000 people, instead of the nearby metropolis Barcelona. It’s quaint in that way—practically mom-and-pop. Yet, the firm’s three architects work collaboratively, building open structures that anyone can enjoy, the jury says. It’s a much lighter declaration than choosing, say, a woman like Jeanne Gang or an Iranian practice like Admun Studio.

RCR Arquitectes’s buildings evoke the same sentiment, by letting light and greenery inside.

said he had “grave concerns” about concussions, but also denied the problem was as widespread or severe as Gladwell implied. Citing a study from the University of North Carolina, he said there were more direct fatalities in lacrosse, water polo and baseball than football, so why not ban those sports?

When Facebook goes public, he will own a minority stake in the company — but will control more than half of the voting power.

Mr. Zuckerberg is fascinated by ancient Greece and Rome. As a boy, a favorite video game was Civilization, the object of which is to “build an empire to stand the test of time.” Civilization, one friend says, was “training wheels for starting Facebook.”

particularly in the early days, Mr. Zuckerberg was so confident that he often came across as aloof. He wasn’t the best communicator, Mr. Green says. “You can see that as a bad thing, but you have to have an irrational level of self-confidence to start something like Facebook

Eager to protect Mr. Zuckerberg, he helped come up with legal documents that guaranteed Mr. Zuckerberg two Facebook board seats. (Mr. Parker got one.) As long as Mr. Zuckerberg held a seat, his shares couldn’t be taken from him

Less than 1 percent of registered voters turned out for Maine’s caucus. In Nevada, where Republican turnout was down 25 percent from 2008, only 3 percent of total registered voters participated.

In Florida, the largest and most diverse state among the nine, turnout was down 14 percent from 2008. And 84 percent of the state’s total registered voters  did not participate in the Republican contest.

In the Palmetto State, 98 percent of primary voters were white, 72 percent were age 45 or older and nearly two-thirds were evangelical Christian, according to exit polls. From this picture, you may think South Carolina is an all-white, aging state, full of fervent churchgoers. But the Census says the state is only 66 percent white, with a median age of 36. Exit polls from 2008 put the evangelical vote at 40 percent of total.

Whites are 63.7 percent of the total population of the United States; in 1900, they were 88 percent — still more diverse than Republican primary voters today.

To refuse to discuss ideas such as types of capitalism deprives us of language with which to think about these problems. It makes it easier to stop thinking about what the economic system is for and in whose interests it is working.

Perhaps the protesters occupying Wall Street are not so misguided after all. The questions they raise — how do we deal with the local costs of global downturns? Is it fair that those who suffer the most from such downturns have their safety net cut, while those who generate the volatility are bailed out by the government? — are the same ones that a big-picture economic vision should address. If economists want to help create a better world, they first have to ask, and try to answer, the hard questions that can shape a new vision of capitalism’s potential.

On Monday, a relief convoy to the Yarmouk camp, home to Syria’s largest cluster of Palestinians, was forced by gunfire to turn back. The United Nations agency for Palestinian relief said that the government insisted the convoy enter through the southern gate — requiring a dangerous drive through contested territory — not the more secure, government-controlled northern one.

Three weeks after accepting a government cease-fire deal, Moadhamiya has received just one food shipment, residents said, enough for perhaps a meal apiece. Several thousand civilians were evacuated from the town under an earlier, equally rocky truce, but the departures stopped after shelling hit a group as it left, and others disappeared into the jails of the security forces.

He illustrates how difficult it was to have any foresight at all, let along to see clearly, and he reserves his greatest interest for players whose imaginations were most fertile. Lawrence was the best and most eloquent of these manipulators, but he was by no means alone.

Mr. Anderson is especially illuminating about Lawrence’s purely political gifts: his way of anticipating the fallout from strategic or military maneuvers, his “peculiar skill at polite belligerence,” his no-nonsense powers of description.

Yes, it was history à la Hollywood, with moments of clear exaggeration. But its effort to depict Lawrence, his military raids, the tribal leaders with whom he dealt, the inept British military effort and the sly French diplomatic one are all shown by this book to be unusually faithful to the facts. It’s high praise for both the visually grand film and this grandly ambitious book to say that they do have a lot in common.