A not Unminor problem

[Peter K.]

>>To which I have to ask: if we did, I thought a major theme of Doug's book
>>is that financial markets aren't even efficient.  Have I gotten something
>>wrong?
>They're efficient in the sense of incorporating all available
>information (almost) instantaneously, which is practically a
>tautology. But the financial economist's sense of "efficient" has
>little to do with an ecologist's, engineer's, or anyone else's.
>
>Doug

Here's a new article on finance theory, "convergence arbitrage," and the
problems that Russia’s devaluation of the rouble and partial default on its
rouble-denominated debt in '98 caused for Long Term Capital Management:

http://www.lrb.co.uk/v22/n08/mack2208.htm

In it, the author writes, "As [LTCM's] difficulties grew, the Federal
Reserve Bank feared the consequences for already nervous capital markets of
a sudden forced liquidation of the fund’s large commitments, and therefore
co-ordinated LTCM’s $3.6 billion recapitalisation by a consortium of
American and European banks."

I wonder what would have happened had Big Government not meddled with the
markets' efficient workings. This sort of thing is bound to happen again,
no?

Peter