Stability of the monetary policy framework — and of policy settings themselves — seems to have been a source of confidence for
financial markets in Australia, helping them
avoid the extreme market
instability that characterised many countries over the past couple of years.
Moreover, it is now doubtful whether the efficient market hypothesis makes any kind of sense. Indeed, a great many economists and bankers have discovered Minskyâ $ ™ s views on
financial fragility and his
financial instability hypothesis, according to which banks and
financial markets can not be left to themselves: we need regulations even though regulating markets may not succeed in
avoiding another crisis once the memory of the current crisis has faded away.As told to me by a law student recently hired by Blackrock, the largest asset manager in the world, with assets totalling more than 3,500 billion dollars â $ «thatâ $ ™ s one and a half times larger than UBS and twice as large as PIMCO â $ «many asset managers are now turning away from hiring neoclassical economists and actually prefer hiring engineers, sociologists and even philosophers.