Home > Views > Blogs > Market Movers > The Fool of Last Resort
PRINT
RSS
SHARE
TEXT SIZE:
Send a copy to me

Separate multiple email addresses (max 20) with commas.

0/1500
Letters are not case-sensitive, disregard spaces.
captcha image
Try a New One
This helps us prevent automated registrations and spamming.

Main
Spitzer: The Monoline Angle   The Latest Argentine Default
Mar 12 2008 10:19AM EDT

The Fool of Last Resort

The Fed is worried about a lack of liquidity in the credit markets. The Fed acts to make the markets more liquid. Is the Fed's action foolish? We hope so!

We like to think: "market -- trade -- liquidity -- good, etc.", forgetting the Glosten-Milgrom point that liquidity often rests upon the presence of fools.

If the problem is that there are too few fools in the market, it might make perfect sense for the Fed to step in as a fool of last resort. With any luck, once the Fed starts acting foolishly, other market participants will follow suit.

See more in

Loading...


Recent Blog Posts

Archive

May 2008



Also in Portfolio.com
Most Emailed
Recently Commented