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« Election Day Rally | Main | How Equity Investors Should follow Credit Markets »

November 05, 2008



Price discovery ? Why not let the market deceive and not a private banking cartel. See Adam Smith - Wealth of Nations


How you think when the economic crisis will end? I wish to make statistics of independent opinions!



As usual, I appreciate the comments from our readers. I think our comments generally show a high level of sophistication, rather than a cheering section.

My point is a simple one. The existing "markets" have not done a good job of pricing. Anyone who monitors prices regularly knows the difference.

How can anyone object to price discovery? We should all beware of thinking that we know the answers when we do not have a liquid trading market.

I invite those objecting to this viewpoint to defend the credit default swap market, the source of the problem.

Thanks agin to all.



A big part of the trip back to stability would be efficiency in these wildy overbuilt sectors: finance, retail, etc. via M&A...

But lo and behold the Administration stopped the first combo of any kind outside the highly-political, overtly-racist Dubai Ports World deal. I'm sure it had nothing to do with Eric Schmidt's meetings in Chicago this week... naw... not a thing.


Surely, price discovery mechanism proposal may not be a bad idea. But as mentioned, the market has this already. More important will be the re-establishment of trust between trading entities, by having a fast, strong and decisive leadeship.

Everyone is simply scared and uncertain at the moment.


Of course, we have an actual mechanism for price discovery. It's called the market, and the market has said this stuff ain't worth much. The market is plenty liquid, just not at the prices that keep banks solvent.

This isn't a liquidity problem, it's a "the banks fucked up problem." And the way to solve it isn't with price discovery, it's with transparency, separating the screw-ups from the solvent banks, swapping debt for equity in Chapter 11 processes, and getting on with life.

And attempt at "price discovery" is just a backdoor attempt to subsidize banks who screwed up.

If leading experts like Bill Gross think these prices are too low, then he can make a ton of money buying this stuff at these low prices. I cetainly wouldn't begrudge the man his juicy profits, as long as he isn't doing it on the backs of taxpayers. But nailing the taxpayers is definitely the hidden agenda behind all this "price discovery."

Michelle B

Please make sure you submit your ideas regarding this topic at the President-Elect's site:

At the bottom, blocked in dark blue are the various topics, click on the appropriate ones, and then click the submit idea icon.

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