Is More Regulation Truly the Answer for Bubbles?

Hat tip to PJ King. An interesting article clearing up some misconceptions in regards to the Efficient Markets Hypothesis, its different variations, and what they actually say. Further on, I also found a good question poised for those who think more regulation is the answer to financial bubbles.

There are several variations on the Efficient Markets Hypothesis, depending on what info counts as “available.” Weak versions only count very widely and easily available info, while strong versions even count info available with difficulty to only a few. The strongest possible forms are silly, and no one ever believed them. Weak versions, which require info to be available to many deep-pocket market speculators, are much more plausible, and I don’t see recent history as offering much evidence against them.

What widely available info should have told you the market was in a bubble? And if you think you see such info, why did so few investors actually attend to it? And if you propose a regulatory regime to fix market mispricing based [on] the existence of such info, how will you ensure that regulators attend to that info when investors do not?

Let's not forget that regulators basically failed to raise the alarm for the housing bubble, and in fact government actions fueled it. This was despite the fact that the bubble was widely discussed and debated well before it popped. And actually... some of the loudest warnings came from prescient private investors.