Well,I'm not even halfway through the Lowenstein book on LTCM [When Genius Failed], I've also peaked through Jorion's paper on LTCM and Michael Lewis's perceptive account for the New York Times.One theme has recurred in both Jorion's and Lowenstein's book -- Greenspan subscribed to the notion that markets were becoming more and more liquid due to derivatives and therefore prices were becoming closer and closer to "perfectly rational" and hence eliminating wild speculative crashes.The "liquidity myth" is mentioned as a perjorative a few times by Lowenstein, and I believe once by Jorion.I'm curious for others thoughts. It seems to me that, big picture, derivatives are a way of securitizing certain risks in hopes of creating a market for willing buyers and sellers. However, the only way this market could be "perfectly rational" were if each trader were a lone individual with exactly equal market power and that no one was a market maker. In the case of LTCM, in addition to many other mistakes, they became large enough to become the "hunted" instead of the "hunter" to borrow a turn of phrase from Doctor [Hi Omar!] Taleb.Gentlemen [and ladies!] start your engines......PS I was flipping through Lowenstein's book on Warren Buffett and I'm very tempted to buy after finishing this one.

Another splendid toast to the groom.