Modern investment theory says that public securities markets- computerized, blazingly fast, effusively liquid- are as close as mankind has ever come to realizing the perfectly efficient market of classical economic theory. In such a perfect market, entrepreneurship is impossible. The
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The ideology of modern finance tears capitalism in two, and then abandons the half beyond the ken of bureaucrats and professors who train them. Capitalism demands free markets because it needs free minds. Modern investment theory says efficient markets can
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Just as the core theory of equity indexing was that diversification could substitute for exhaustive ( and perhaps unreliable) analysis of the underlying companies, the core theory of structured finance was that by combining large piles of individual credits into
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“Here is the quickest way to determine if you are operating in an honest capitalist system or a corrupt imitation thereof: check the bankruptcy rates. For most of the last hundred years, the United States has had both the strongest
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“As the mortgage crisis unfolded it soon became clear that a different Bush was in charge. As late as the spring of 2008, only the Bear “hedge funds” and a bunch of mortgage originators had been all;owed to die. No
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“The government fell into the same deeply anti-capitalistic error that plagues contemporary financial theory: it put money before mind. Rather than addressing the intellects of citizens with the information to make prudent decisions, it tried to bribe them with cash
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“The bankers fervently believed their new structures and systems would better ensure the soundness of their loans than old- fashioned credit analysis and human judgment, fraught as ever with human error. Having crafted a system that seemed to relieve them
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The “ideology of modern finance” replaced the capitalist’s appreciation for free markets as a context for human creativity with worship of efficient markets as substitutes for that creativity. The capitalist understands free markets as an arena for the contending judgments
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“Prevailing in Washington as on Wall Street were the most vile and self destructive assumptions of anti-capitalists everywhere who imagined they could wield capital even while abandoning the principles that created it; that systems could substitute for the moral standards
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To blame the mere shortage of cash for the evils caused by incompetence and corruption is the favorite lie of socialists and crony capitalists everywhere. Socialists always say there is no problem of inequality or poverty that can’t be solved
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