There were two interesting articles in today's New York Times. On the front page was "Wall Street Pursues Profit in Bundles of Life Insurance" by Jenny Anderson, reporting on new products Wall Street is creating that sound a lot like the old products that got us into this mess. Interestingly, some of the firms have approached DBRS for a rating. DBRS was the only firm that would rate asset-backed commercial paper with so-called Canadian-style market disruption clauses (which provided that a liquidity guarantee was only provided if commercial paper could not be issued at any price by any issuer). The freezing of the ABCP market in 2007 was Canada's equivalent to the subprime fiasco in the U.S. Although DBRS subsequently stopped rating the paper, the Canadian Securities Administrators are considering whether greater oversight of credit rating agencies is required.
The second, in the magazine, is "How Did Economists Get It So Wrong?" by Paul Krugman. It details the internecine fights among schools of economists (the "saltwater" and "freshwater" economists) and concludes that a belief that markets are always efficient and will always find the correct balance are mistaken.