Making Judgment Obsolete

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...

Idols of Ignorance

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 moot the...

When Theory Replaces Judgment

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...

The Value of Bankruptcy

“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 economy and the highest...

The Favorite Lie

“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 institution with any prestige or political clout went...