In $2tn debt crisis threatens to bring down 100 US cities, the Guardian reports on how cities are increasingly at risk of sliding into bankruptcy—just like normal people and countries seem to be.
New Jersey governor Chris Christie summarised the problem succinctly: “We spent too much on everything. We spent money we didn’t have. We borrowed money just crazily. The credit card’s maxed out, and it’s over. We now have to get to the business of climbing out of the hole. We’ve been digging it for a decade or more. We’ve got to climb now, and a climb is harder.”
It seems just about everyone thought the credit bubble would never burst—because they hid from themselves the lessons of the past, encouraged by irresponsible economists and bankers who should have known better than to believe the status quo was invincible.
But, frankly, everyone should have been more careful and less gung-ho, especially those in charge of cities and countries.
Looking through the list of cognitive biases reveals a laundry list of biases we all fell prey to in the lead up to collapse. Anchoring, the bandwagon effect, confirmation bias, wishful thinking, the ostrich affect,… the list goes on and on.
And I’m sure we’ll do it again and again; it’s human nature to fall prey to temptation.