The Financial Instability Hypothesis of Hyman Minsky http://www.levy.org/pubs/wp74.pdf suggests that free markets have an inherent tendency to excesses.
Events of the last decade brought Minsky’s theory to the front.
“Markets” play a role, but who are the real actors in this area? What about government fiscal policy, Central bankers, hedge funds or others?
Do Insurers & Pension funds play a role?
Finally, are there ways to moderate the valuation cycles?
Can regulators and central banks take counter cyclical actions? If so, what would they be?
In the insurance and banking world, are capital requirements pro-cyclical? If so, how could they be modified to be counter cyclical? What would the the other consequences of such changes?