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“Stock market bubbles don't grow out of thin air. They have a solid basis in reality — but reality as distorted by a misconception.”

George Soros

BuzzFlash interview (2004)
Context: Stock market bubbles don't grow out of thin air. They have a solid basis in reality — but reality as distorted by a misconception. Under normal conditions misconceptions are self-correcting, and the markets tend toward some kind of equilibrium. Occasionally, a misconception is reinforced by a trend prevailing in reality, and that is when a boom-bust process gets under way. Eventually the gap between reality and its false interpretation becomes unsustainable, and the bubble bursts.

“How can we escape from the trap that the terrorists have set us? Only by recognizing that the war on terrorism cannot be won by waging war. We must, of course, protect our security; but we must also correct the grievances on which terrorism feeds. Crime requires police work, not military action.”

George Soros

Address at the University of Pennsylvania (2002); quoted in "White House playing into Soros' hands?" by J. Michael Waller, in WorldNetDaily (1 December 2003) http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=35893