The dustbin of bank history is filled with spectacular failures. Consider a representative short list: The developing-country debt crisis. The energy-sector collapse. The commercial real estate debacle. The Asian-markets implosion. All were the result of suspending good judgment and chasing after the latest "can't miss" opportunity.

Each of these opportunities had been viewed by bankers as nothing short of a modern miracle. Sovereign nations were said never to default; oil prices were going to $60 a barrel; every building project's cash-flow forecast was three times the debt service; and Asia would sustain 12% economic growth indefinitely. They represented some of the best returns ever - right up to the second they crashed and burned.

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