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Investors left dazed by violence of recent swings

By Gillian Tett

Published: October 27 2008 17:36 | Last updated: October 27 2008 17:36

A couple of years ago – or before banks started to go bust – economists sometimes liked to talk about a phenomenon they christened the “Great Moderation”.

This was the idea that the 21st-century financial system and global economy had become so stable and sophisticated that dramatic swings in activity had seemingly disappeared. Volatility, in other words, was supposed to be an issue of the past.

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