Inefficient markets are inherently profitable. They are also, in my view, inevitable and essential. Efficiency is about value and information and how quickly it's understood. It's unfortunate that those in power feel compelled to prevent an essential element of efficiency and innovation i.e. failure. I'd hardly say that the US equity market is more efficient than it was even 6 months ago, and obviously the bond market is becoming increasingly more speculative.

Do you think corporate bonds will be valued with greater efficiency post Bailout(s)? How efficient will the commercial paper market be if investors believe either a) secured debt purchases are no longer secure or b) That regardless of type of purchase, they are secure; the latter implying a moral hazard, firstly, but would create hyper inefficiency by funding more failure.

Who is regulating the Government? The lawmakers are the Architects of the Macro environment, the foundations of which got laid with the Auto-industry, consumption, and housing, but they can be read, singularly, as credit. An economy build on credit.

Market efficiency and therefore price transparency is propelled by arbitrage, and by definition arbitrageurs take aim at such inefficiency, theoretically, exploiting the discrepancies in value which brings price clarity, quickly, and causes markets to react for the better.

And what were lawmakers doing once the source of the current crisis was identified: they wanted to know how to go after the arbitrageurs. That's how dangerous and ignorant the thinking is. Washington D.C. wanted to hang the very people that could have brought pricing clarity to the mix. And why are things still no better--with lending frozen and toxic assets still sitting on balance sheets (or on proxy balance sheets)?

No clarity and no agreement on the price of the banks' toxic sludge.

The last 3 months have seen an abnormally distorted valuation of the US equity market, leading to a sense of urgency on behalf of banks to pay back TARP funds; the net effect of which could be described solely as a confidence builder for investor psychology, while having no net positive long term effect on the health of the US Financial system.

More importantly though, I personally wonder where the money would have gone if banks had lent the TARP funds like they were supposed to--or just eased lending more broadly.

Sub-prime was created to create demand for money and after sub-prime borrowers who is left to lend to?

There's been a decent and fair critique of the US's departure from manufacturing to service and information in terms of goods produced and what our model had turned into was not of service and value but of wealth creation, wealth was both the end and the means, rather than the by-product of efficiency and innovative businesses.