This has led some to say that lack of confidence is the cause of crises.
This is a truism, but it does not explain what is the real cause of this lack of confidence, which, when the crisis comes, is not mere unreasoning fear that needs only to ignore the danger to banish it.
Might it not just as truly, if not more truly, be said that the cause is _over-confidence_ in the period preceding the crisis?
The essential characteristic of a crisis is the forcible and sudden movement of readjustment in the mistaken capitalization of productive agents.

Capitalization runs through all industry.

The value of everything that lasts for more than a moment is built in part upon incomes that are not actual, but expectative, whose amount, therefore, is a matter of guesswork, or "speculation."[10] Many unknown factors enter into the estimate of future incomes.

The universal tendency to rhythm in motion (material or psychic) manifests itself in an overestimate or underestimate of incomes and of every other factor in value.

This is emphasized by a psychological factor called sometimes the "hypnotism of the crowd," and sometimes, the "mob mind." Most men follow a leader in investment as in other things.