麻豆社

In the depths of the financial crisis of 2008, American bankers-turned-regulators met to discuss plans to restore market confidence by injecting vast quantities of cash into the failing system. "What about $1 trillion?" , Neel Kashkari is reported to have suggested. "We'll get killed," Hank Paulson is said to have replied. And so the figure of $700 billion was agreed, the biggest bailout in history calculated not on market truths but on political realities.

Juliet Samuel writes for The Daily Telegraph and in this essay she looks back at the recent history of financial markets to ask whether markets really are, as many economists believe, vast mechanisms geared towards discovering truth - the true price of assets, the true risks and rewards of investment and therefore the most efficient allocation of cash.

As she considers financial market failures such as the 2008 crash and the euro crisis, Juliet argues that, ultimately, there is still a compelling reason for believing that markets are as close to economic truth as we can get and it is almost impossible to beat them. Investors who try to do so, so-called "active managers" who are probably managing some of your pension fund right now, have consistently failed to get to the truth more accurately than the market. What we are learning is how and when markets can discover the truth - and when it's simply undiscoverable.
Producer: Julia Johnson.