Tuesday, November 9, 2010

Weren't we just talking about "trust"...?

When Matt Ridley referred to "frequent setbacks"  maybe he had
this in mind:

"Even Alan Greenspan is confirming what William Black,
James Galbraith, Joseph Stiglitz, George Akerlof and many
other economists and financial experts have been saying for
a long time: the economy cannot recover if fraud is not
prosecuted and if the big banks know that government will
bail them out every time they get in trouble."
------------------------------------------
"The underlying problem isn’t a liquidity problem. As I’ve
noted elsewhere, the problem is that lenders and investors
don’t trust they’ll get their money back because no one
trusts that the numbers that purport to value securities are
anything but wishful thinking. The trouble, in a nutshell, is
that the financial entrepreneurship of recent years — the
derivatives, credit default swaps, collateralized debt
instruments, and so on — has undermined all notion of true
value."

Full essay from whence these quotes come is  here

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