The Libertarians

Soviet Wall Street

Best quote I’ve seen explaining the mortgage crisis and inability to price financial products accurately:

There is a wonderful parallel here to the collapse of the Soviet Union. As the great Austrian economist Ludwig von Mises argued almost 100 years ago, central planning inevitably fails because there are no market prices to allocate resources. Market prices can only be the outcome of actual market transactions among buyers and sellers. Planners used mathematical formulas to value resources, especially capital. Now Wall Street wizards have imported Soviet thinking to allocate financial capital. Is it any wonder that it failed?

And is it any wonder Wall Street apparatchiks went running to Washington for help when things went sour?