Everyone has experienced making plans; however, all plans are dependent of our expectations, because we do not have complete or perfect information about our future. Our expectation is made based on the natural factors, our experience and some relevant information. The changes in the factors that influence our futures will change our expectations; meanwhile, our expectations are also one of the factors that influence our futures. The debt crisis from the last century, the Mexico's debt crisis, was a crisis that was caused by the people's expectations. Many studies have found that if the maturity could have extended, it would have been impossible for the crisis to take place; however, the reason that Mexico was unable to extend its maturity of their sovereign debts because at the time the market had am expectation that Mexico was about to default and no one was willing to let Mexico roll over its debts.
The crises that are caused by people's expectations are impossible to be predicted. This is because sometimes the changes in people's expectations are very random, they could even be caused by whispers and rumors. Moreover, the expectations do not reflect the truth about the market. Because of the concentration of capitals and wealth, the market expectations are actually represented by a small group of people who have the control of the enormous capitals and wealth. When this number is small, the expectations they make would be distanced from the truth, and wrong expectations could increase the systematic risk.
Therefore, the expectation itself is a source of risk.
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