MICHEL PIREU: The market knows best, and other fallacies
It also is not worth what it claims to be, and there is no easy money to be made
In October 2008, 82-year-old Alan Greenspan admitted to the US house committee on government oversight and reform that he had been wrong to believe that financial markets knew best; that they moved capital from those who had it to those who needed it, that they spread risk, that they gathered and dispersed information, that they regulated global economic affairs with a swiftness and decisiveness that governments couldn’t match.
“I had been going for 40 years or more with very considerable evidence that it was working exceptionally well,” said Greenspan. “But then suddenly they didn’t. The whole intellectual edifice collapsed in the summer of last year.”..
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