> >
>> The insurance company that raised money by issuing such securities
>> would use the proceeds to buy securities linked to a lot of other
>> countries' GDPs. So it would end up with payouts linked to its own
>> country's GDP, but income linked to other countries' GDPs. Get it?
>> Provided all countries didn't go into recession at the same time, the
>> company would have shifted some of the risk of a local recession.
>>
>
>I guess Shiller hasn't heard about 1929, or 1847, or....
Shiller's a weird dude. His academic work on excess volatility - showing that stock prices bob around far more than is justified by changes in underlying fundamentals - really damaged efficient market theory. Yet he wants to expand the scope of the markets so you can trade/hedge/bet on anything. It makes no damned sense.
Doug