The holodecks of the post-Captain Kirk Star Trek universe–high-tech pleasure centers that create the illusion of doing just about anything you wish without risk of harm–sound a lot like the imaginary world in which insurers and investors, in blissful ignorance, traded credit default swaps on worthless securities backed by reckless subprime mortgages without fear of any nasty consequences.
How could so many supposedly brilliant financial minds have been so clueless about the massive exposures they were assuming?
Again, the holodeck analogy helps explain such insane market misbehavior. In “Star Trek,” holodecks come equipped with a safety mechanism to keep people from getting hurt. For example, you could climb an imaginary mountain, yet if you slip and fall, the program simply lowers you gently back to the ground.
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