Unconfirmed Reports

I can’t resist gleefully highlighting this fine book review in the Economist:

The “efficient market hypothesis”, the Nicene Creed of the market rationalists, inspired a wave of innovative financial products, such as derivatives and securitised subprime mortgages, that believers claimed would allow users to exploit the wonders of the market. This gospel was embraced so enthusiastically by the markets that these products soon accounted for trillions of dollars of trades. Then it turned out that the market was not rational after all. Trillions were wiped out and, as one of the cheerleaders for rationality, Alan Greenspan, the former chairman of the Federal Reserve, put it, “the whole intellectual edifice collapsed.”

… Oh: so now they’re saying that free markets aren’t actually ideal, rational, transparent ways of making everything work better. What a cruel shock.