"When it becomes serious, you have to lie" - Jean-Claude Juncker, Luxembourg PM and Head Euro-Zone Finance Minister
http://blogs.telegraph.co.uk/news/davidhughes/100087136/he-m...
http://blogs.telegraph.co.uk/news/davidhughes/100087136/he-m...
The economy is largely about psychology and perception. If someone in a position of authority stands up and says that the sky is falling, they can cause the sky to fall even if it wasn't about to.
It is the same problem as the classic run on the banks. Even a fundamentally healthy bank is going to be in trouble if everyone asks for their money back at once.
So if you aren't one of the well connected people, it pays to be a little paranoid and be first in line to withdraw your money while you can. It's kind of funny, the rational action for any individual is not to keep most of their money in a bank where it is at risk of going away with zero notice. The confidence of the banking system relies on everyone being irrational!
In an economy where perception is reality - if the central bankers and main regulators start screaming that the house is going to burn down...guess what happens....exactly.
So if they think the house may burn down....they have no choice but to lie to stave it off as long as possible.
Hilariously, Schuller went on to say that being caught out lying in this way would not undermine the market’s confidence in future eurozone pronouncements – because it already had no confidence.