Via Greg Mankiw, Bentley University professor Scott Sumner writes on efficient-markets hypothesis (EMH): So the anti-EMH argument for regulation must be based on the following: bankers are irrational and make lots of foolish loans. Regulators are rational and can see that these loans are too risky, and can protect bankers from hurting themselves. At a theoretical level this doesn’t even pass the laugh test. But what happened in practice? What position did the “regulators” take in this crisis? First we need to define “regulators,” who are much more than just …
Vincent de Rivaz, CEO of the UK arm EDF energy, made an interesting but frightening comparison when talking about trading carbon credits under the European Union’s cap-and-trade program: We like certainty about a carbon price. [But] the carbon price has to become simple and not become a new type of sub-prime tool which will be diverted from what is its initial purpose: to encourage real investment in real low-carbon technology. We are at the tipping point where we … should wonder if we have in place the right balance between …
Pittsburgh Tribune-Review’s Bill Steigerwald posted a great Q&A interaction with Heritage housing expert Ron Utt this weekend. Excerpts include: Q: Is this subprime mortgage lending crisis sort of the final extension of this idea of liberalizing home buying? Is this what we get when we push it too far and make it too easy for people who shouldn’t really be borrowing to buy a house to get a house? A: Exactly. Until the mid-1990s there was not much of a subprime market because subprime borrowers were largely excluded. No one …
