Scientists Prove Toxic Assets are Impossible to Regulate

Re:Scientists Prove Toxic Assets are Impossible to Regulate by cousin_it on Friday October 23, 2009 @06:36AM (#898529)

Let's consider a house. Clearly the amount of money that someone would pay for said house varies from person to person. Which value is "correct"?

The one that actually results in a deal happening, which often means the highest amount on offer. The more standardized a good is and the more it's traded, the more well-defined its price is. If deals don't happen, there's no market-clearing price, e.g. no way to price sex with Mother Theresa.

Before you jump in with some clever aggregation function, suppose that the owners want to sell said house. Will they agree to the value that your aggregation function produces?

Yes they will, by my definition above :-)

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Re:Scientists Prove Toxic Assets are Impossible to Regulate by anamax on Friday October 23, 2009 @03:35PM (#899469)

The market clearing price is one definition o "value", but the folks complaining about complexity of derivative pricing are clearly unwilling to accept it.

BTW - Folks who don't participate in a deal often complain that the price at which it occurred was "wrong". Folks who can't find someone to buy from them at the price they want have an analogous complaint.

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