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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: CalculatedRisk who wrote (53161)2/9/2006 5:14:07 AM
From: Mike Johnston  Read Replies (2) of 110194
 
But I always take exception to people that are purests and don't recognize market failures and the role of government in solving some of those failures.

In a free market, there is no such thing as a market failure.
There is only a perception of failure, when the outcome is not what someone would wish or expect.
Free market cannot fail , it just is.

The exception is, of course, when there is fraud or crime being committed and that is where the government has a role.

If DJIA plunged 30% tomorrow, it would not be a market failure, although it would be perceived as such by some, and calls for government intervention would mount.
In that case, government intervention in itself would be a market failure, since a free market would no longer exist.
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