According to Mark Twain history does not repeat itself, but it does rhyme. How true is this in the times of global credit crunch.

We see it again and again, and we will continue to see it again and again in the future for sure. Humans seem to forget the basic nature of all things growing. Nothing will ever grow forever. But just like we never remember that the first snow will make the roads just as slippery as last years snow, good economic times will be followed by a period of 'adjustment'. If you drive your car, you know you can't simply keep on gaining speed forever, you need to slow down from time to time. If not you will certainly come to a most unwanted halt. In worst case you will kill yourself. So you learn to 'read' the traffic. An experienced driver will be able to anticipate different situations ahead.

Why do we never learn to drive the vehicle known as the 'economy'?

Well, we do. At least some of us. I read about the warning lights going off in the sup-prime markets in the U.S.A almost two years ago. But everybody was sure that the market would take care of itself.

Today I read an article in one of our financial newspaper that Joseph Stiglitz in 2001 predicted the crises in the Icelandic economy. The Icelandic bank, Sedlabanki, asked the nobel prize winning Stiglitz to advice them what a small open economy as the one in Iceland, should and could do. They got their report, archived it, and for some reason they found it now.