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 Wall Street sign is juxtaposed against the sculpture on the facade of the New York Stock Exchange, Oct. 3, 2008.   (AP Photo)
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(Newser) – 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.