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Comment by croes | Hacker News Reader

Because markets aren't nearly as clever as is always claimed.

Lehmann Brothers anyone?

More like governments aren’t as clever as claimed. The markets would have put all the bad actors out of business permanently and redistributed the resources (like shinny new buildings and engineers) to areas where they would better be utilized.

Instead it was turned into an opportunity to launder money at planetary scale.

This likely hints to why the truth about the benefits of brutally efficient free markets is distorted in education, it would require the teaching of the remarkable incompetence of collectivism and governments! which we know who won’t like that.

At what cost though? Surely the wealthy will continue on like nothing ever happened while the rest of us are here holding the bag.

Markets seem to benefit some much more than others. Not everyone wants to play this game.

I was there and know all the details what happened and you nailed the key point, they used fear to have you believe what you wrote.

I remember Paulson talking about how ATMs would fail. AIG won’t pay it’s policies. The US equities would crash even further. I hate to tell you but ALL lies, blatant “misinformation” as the new term is.

They needed you to be terrified to save their own skins. Blackrock became the largest landlord in the country afterwards. The very companies that facilitated and promoted and literally caused the bubble and crash were rewarded.

The waitress and mechanic couple with a baby who had carefully saved up $30K never got the opportunity to buy that house down the street from their parents for $90K at foreclosure from the bankrupt banks. Nope, Blackrock exchanged their bad paper, worth, 20c for $1 to your very government for new fresh cash, bought it instead at $120K, down from $150K.

Go crony capitalism! Which isn’t what markets are about.

It's really funny that you're essentially saying "true capitalism has never been tried, we need to give it another shot, it will work this time I promise" without even realising the irony.

Markets are perfectly capable of rewarding bad actors for a very long time. even if they eventually converge towards reality it's not something that you should assume about a market in any given situation (for one thing, a market is only reflecting the opinions of others about a thing, not the reality of the thing. Even if you think the opinions are on average wrong you don't make money by finding the reality, but by predicting when and how the opinions will change).

I think markets are an extremely useful decision tool in a lot of circumstances but they do still have many failure modes which aren't related to not being 'free enough' (especially w.r.t. regulation it can in fact make markets more efficient as opposed to less, depending on the regulation and the market).

What system isn't capable of rewarding bad actors for a long time?

Random allocation.

Which then erases all information.

A perfect market would do this, but it would also suffer from other well documented problems.. the markets we have are very far from disinterested allocation optimization systems.

"Real capitalism has never been tried."

And, of course, cannot fail--only be failed.

Don't act like markets and government are independent entities. The markets influenced the government in their favor long before Lehmann brothers and they did the same afterwards.

The markets you think of are as possible as working communism.

You are well outside mainstream economics. The existence of market failures is only disputed by a tiny minority of economists. You can disagree with the consensus of experts, of course, but it's ridiculous to claim they don't have the "proper education".

I don't think you even realize that your beliefs are fringe.

That’s a pretty clever trick you got there. First you take all of the problems inherent to markets. And then you say “actually it’s the government’s job to fix that, and they’re doing a terrible job”—which you then turn around and use as a justification for more markets and less government!

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