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  • The Origin of Financial Crises [View article]
    Cooper goes so far as to conclude that “If blame (for the current financial crisis) must be laid anywhere it must be placed at the collective feet of the academic community for having chosen to continue promoting their flawed theories of efficient, self-regulating markets, in the face of overwhelming contradictory evidence.” QED.

    Academics develop and provide frameworks for understanding market behavior, but are not the dominant participants. Efficient market theory is based upon transparency and reliable information........whi... then leads to price discovery.

    Taking Congress and HUD out of the mix, had the ratings agencies properly graded the toxic, sub-prime products being packaged as CDO's, they would have been priced much differently and the market would demanded a higher yield to compensate for the higher risk. In turn, this would have made sub-prime loans more expensive.....and fewer would have been issued.
    Jan 10 09:30 am |Rating: +10 -4
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