Re: Madness: Bailing Out Greed in Wonderland

[David Farber <dave () farber net>]

Begin forwarded message:

From: "David P. Reed" <dpreed () reed com>
Date: September 17, 2008 2:42:19 PM EDT
To: dave () farber net
Cc: ip <ip () v2 listbox com>
Subject: Re: [IP] Re:      Madness: Bailing Out Greed in Wonderland

I think the more general issue is that we need markets more than we  
need states.  States seem much less relevant today.  It almost seems  
like a joke that we depend on a narrowly US regulatory structure to  
deal with a problem that more than ever before transcends borders and  
power-bases.  China's economy = WALMART.   China provides the  
counterparty to much of the debt being used to "bail out" so-called  
"US" financial institutions. So regulating the US market too heavily  
can be nothing less than an act of war on the Chinese industrial system.

This is not the same as the 1930's.

It's a fantasy that markets fit within states, even approximately.

David Farber wrote:
> Begin forwarded message:
>
> From: Russ Nelson <nelson () crynwr com>
> Date: September 17, 2008 12:51:44 PM EDT
> To: dave () farber net
> Cc: Rahul Tongia <tongia () cmu edu>
> Subject: Re: [IP] Re:     Madness: Bailing Out Greed in Wonderland
>
> For IP if you wish, David.
>
> David Farber writes:
> > If nothing else, I always remember from Econ 101 that "free
> > markets" need essentially perfect information.
>
> Gosh, Rahul, then it seems like you remember nothing.  To have a
> perfectly efficient market, you need zero transaction costs and
> perfect information.  Anything less and you don't have perfection.
> Is that a problem in the real world?  No, of course not.  Everything
> has friction and yet we manage to get things done.
>
> Because politicians love to fiddle, no market escapes regulation.
> However, you can compare a *more* free market to a *less* free market,
> and come to conclusions about the value of freedom to trade.
>
> My own feeling?  We need separation of markets and state.  You may
> gasp "Not possible!  What about market failure?!?"  And yet when our
> country was founded, all governments chose the religion that their
> citizens would observe.  Religious freedom was thought to be
> impossible; a sure road to hell.
>
> -- --my blog is at    http://blog.russnelson.com   | Software that  
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