The Markets Have Evened Out When ...

Analyst gives four signs of sanity to scan your tea leaves for
By Kevin Spak,  Newser Staff
Posted Oct 6, 2008 9:14 AM CDT
The Markets Have Evened Out When ...
The Wall Street sign is juxtaposed against the sculpture on the facade of the New York Stock Exchange, Oct. 3, 2008.   (AP Photo)

The main thing ailing the credit markets is a crisis of information, writes L. Gordon Crovitz in the Wall Street Journal, so it’ll probably end when we have some. Things may be looking up when…

  • Prices are discovered: Right now, there’s no demand for mortgage-backed securities, and hence no price. When we see some transactions that don’t involve the government, the picture will be clearer.

  • Short-selling is decriminalized: Short sellers are the first to alert the market when something’s wrong with a stock. “Shooting the messenger didn’t undo the message.”
  • Lawyers clean up their terms and conditions: Lawyers are among the overlooked culprits in this debacle, having failed to draft clear terms for mortgage-backed securities.
  • When the government stops mandating bad loans: Washington caused this crisis by decreeing that banks must lend to unqualified buyers. It should avoid such complex waters.
(More credit market stories.)

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