Compose a 3000 words essay on How markets fail. Needs to be plagiarism free!Download file to see previous pages... He said that despite the fact that there are economic thinkers such as the utopian an

Compose a 3000 words essay on How markets fail. Needs to be plagiarism free!

He said that despite the fact that there are economic thinkers such as the utopian and reality-based economic thinkers. market can still fail mainly because of the unseen variables. According to Cassidy, market can fail despite the fact that the prevailing conditions are favorable (403). To many, a financial crisis of such nature in an advance economy appears to be a phenomenon of the past. It is like diseases such as smallpox which are still found in poorer countries, but essentially eradicated from the developed countries. However, Cassidy warns that financial crisis can still occur despite the fact that the economy is advanced. Cassidy was aiming at responding to the disaster that hit the western banking system unexpectedly. The financial crisis occurred during the period when most people were expecting positive results. Both the utopian thinkers and real-based economic thinkers could not tell what was going to come. They could not anticipate nor imagined that the disaster would originate at home. All they knew was that there was a growing current account imbalance between the United States and china and that incase of any form of financial crisis, these two countries are likely to be the first one to experience the crisis. Most people believed that changes in technology and the impact of globalization had enabled the central bank to figure out the secret to conducting monetary policy in a stabilizing way. Because of this, most people including the economic thinkers believed that the central was equipped with necessary knowledge, skills and know how having kept the economy on track after a series of ups and down in the 1990s. Most economies did no even stop to ponder about the case of Japan, which experienced economic bubble despite the fact that its economy was advanced. They claim that it would have been a normal phenomenon to find a financial or banking crisis in Japan given that Tokyo, a hybrid economy, lacks real market economy like the Great Britain. Unexpectedly, the disaster struck the economy that was believed to be advanced and strong to resist the tides. Most people, including the economic thinkers had no real answers to the unexpected phenomenon. Cassidy had an idea of what might be the cause of the unusual breakdown. As mentioned above, Cassidy wanted to clarify the fact that in event of financial crisis, bankers do not have bigger responsibilities and therefore, no one should lay blame to them (405). Cassidy argues that even if bankers had tried their best to meet the interest of their shareholders, there is no assurance that would have fulfill the interest of everybody. This is because society, according to Cassidy has different believes and perceptions, which may not be good for banks. Cassidy asserted that the belief that most of the economist have about the market is a mere theory. He particularly criticizes the belief that most of the proponents of the free markets have about market behavior. Cassidy questioned whether producers and consumers in a free market can lead to a beneficial outcome for a whole society. He also questioned the argument brought forth by the famous economist, Adam Smith that states that market systems is similar to an enormous decentralized machine for conveying signals and that the resulting outcome is both efficient and stable.