[ExI] Greed + Incompetence + A Belief in Market Efficiency = Disaster

[samantha]

Stefano Vaj wrote:
> On Thu, Jan 29, 2009 at 4:33 PM, BillK <pharos at gmail.com> wrote:
>> GMO's quarterly update, by Jeremy Grantham has an enjoyable rant
>> blaming believers in the efficient market theory for the economy
>> crashing.
>> <http://www.gmo.com/websitecontent/JGLetter_4Q08.pdf>
> 
> The prob is that within classic economic theory the market player
> cannot really be "incompetent" as a whole, since they are the ultimate
> judges of where their preference lie at any given moment, and since
> their "efficience" is supposedly assured by the market mechanisms
> themselves.


Even in classic theory the mechanisms must not be forced and gummed up 
as they invariably are in modern mixed economies if the machine is to 
function well.   What is really annoying is that the more the machinery 
is utterly interfered with and even destroyed wholesale the more "market 
mechanisms" are devalued and laughed at.


- samantha