How The West Worsens Crises By Denying Market Signals

IBD Editorials
By NICOLE GELINAS

Before 2007, the rules necessary to govern a market economy broke down. Rather than fixing those rules, the West has repudiated market economics. No longer do Western governments use investor signals as feedback in devising policies; instead, they ignore or subvert those signals.

Start with the euro crisis. Thirteen years ago, the euro introduced a corruption into capital markets. Investors assumed that the euro's champions — Germany and France — would never let a weaker eurozone country default. This belief enabled Greece and others to borrow too much too cheaply.

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