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.