Frightening transparency

By Simon St. Laurent October 9, 2008 | Comments: 2 I'm not very fond of people who claim that markets can solve all of our problems, but at the same time, I think markets can be very effective at one key economic task: setting prices. Our current financial problems derive, at their foundation, from private transactions that weren't nearly careful enough about the prices of the goods underneath them. People mistook trends of the present - rising housing prices, the AAA ratings of investment houses, and so on - to be permanent fixtures of the economy. Then they built complex structures on top of opaque and not very stable pricing expectations, adding fuel to the fire by creating compensation structures that rewarded those most willing to misbehave. There are a few ways to handle these kinds of problems, to ensure that they are... [read full story]