Because then anything the government might do to regulate derivatives would already be anticipated by the market and priced into the derivatives?
Meaning that a form of derivatives that would pose a significant risk of systemic collapse (i.e. a risk that isn't thermodynamically small) would be priced prohibitively?
Meaning that what we're seeing right now before our very eyes Cannot Happen(TM), any more than all the air molecules in my living room can spontaneously gather under my table, thus choking me of air?
Now, if something actually happens that your model has assigned a thermodynamically small probability... Normally, you'd chuck that model out, right?
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
In the real world, an equilibrium between aggregate saving and aggregate investment then proceeding to drive national income just doesn't make sense ... out here, investment is one of the drivers of income and income one of the drivers of saving. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
