> Misunderstanding when models should and should not be applied is one of the core reasons we got into an asset bubble in the mid-2000s. Banks were pricing financial products using models whose assumptions did not hold over the long-term.

IMHO there's nothing wrong with economic bubbles, there's no economic law that I know of which says that economic growth should only happen linearly.

What was wrong with the financial bubble of 2008 was the way it was handled, starting with the Bear Stearns bailout in early 2008 (of which not many people speak anymore, is like everything started with Lehman Brothers in September).

Yes, banks had made some very wrong assumptions and they should have paid dearly for them, like in any free market. That didn't happen.