Friday, September 26, 2008

Asymmetrical information? No information!

I meant to point to this ages ago, and it seems that I forgot (see point 4).
Good financial innovation ...... has been lacking because it’s very difficult for anyone to own its beneficial effects; it’s a public good. By contrast, the gains from “bad” financial innovation - overly complex mortgage derivatives - are more appropriable. So we get more of it.

The whole thing is worth a look.

Funny, today none of the banks look like they're prepared to lend to each other because none of them has a clue about how over-extended the others are. Or even how over-extended they are themselves.

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