WSJ interview with Nouriel Roubini

22 02 2009

As usual, Roubini is right on:

“I believe in market economics,” he says, with some emphasis. “But to paraphrase Churchill — who said this about democracy and political regimes — a market economy might be the worst economic regime available, apart from the alternatives.

“I believe that people react to incentives, that incentives matter, and that prices reflect the way things should be allocated. But I also believe that market economies sometimes have market failures, and when these occur, there’s a role for prudential — not excessive — regulation of the financial system. The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there’s no market failure.”

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