Via FT.com / Columnists / John Plender – Ditch theory and take away the punchbowl:
There are, by now, a thousand and one ideas in circulation on how to change the regulatory architecture of finance. But what about changing the central bankers – or at the very least their mindset, since their notions about how to deal with bubbles have proved extraordinarily costly for the rest of us.
Note, too, that the new breed of economists in central banks have been doggedly wedded to the idea that markets are efficient, despite the recurrence of bubbles throughout history – a phenomenon that makes a nonsense of this belief. And their focus was largely on consumer prices rather than asset prices which did the damage.