Already in the 14th century Friar Guillermo de Occam devised a principle based on a very simple premise: in equal conditions, the simplest solution is probably more correct. The Anglo-Saxons used the acronym KISS (Keep It Simple, Stupid). It is also called principle of thinking economy. This postulate can be applied to a multitude of facets. The simplest complete explanation is probably true, although you don’t have to be.
I’m walking through the field and see a sheep dead of which are missing legs and medium body. I approach and appreciate bites and traces of struggle in the head. I think that it has been attacked by a Wolf, because there on the mountain he will go any herd of these animals, either an extraterrestrial ship has landed there, and an alien with hunger has merendado the poor sheep. After this slight exaggeration, let’s look at how the principle of Ockham can be applied to various events and current situations. If housing prices have been rising at a pace years of two digits, the most probable is that) we are in a bubble. (b) is of high value and highly appreciated in Spain.
As everyone wants to have a House on property, they will continue to rise indefinitely. So now we are where we are. However, Manuel Jove saw it in time, and sold to Martinsa Fadesa for several billions. If a famed financier as Madoff is able to offer a much higher profitability for a long time: to) is a pyramid or Ponzi scheme. b) is much more intelligent than others, so it is normal to be able to break the classical relationship between profitability and risk. Interestingly, we do not learn and stories are repeated. Ponzi was selling stamps and here in Spain we had the case of Afinsa and Forum Filatelico. If the international economy is plummeting and doing water everywhere: to) perhaps its growth did not have a real basis, and we are paying for the excesses. (b) Governments and the barons of the economy have collaborated to the fall with its lack of observance of basic principles, allowing that speculation dominates the financial economy, on the basis that the important thing is the free market and the non-interventionism. c) have based the growth in an exaggerated assumption of risk, and excessive leverage. (d) we should always keep in mind this principle, and analyze why things (the Japanese would say ask why three times). As the conventional wisdom says, nobody gives four pesetas hard (would have to upgrade this saying to euros).