just reading a review of a slew of new books apologizing for the collapse of the "free" market and having just seen sight of a new paper by Andrew Odlyzko, outling some thoughts towards a model of Gullability and a talk by Michael Mitzenmacher about
Information Asymmetries in Pay-Per-Bid Auctions: How Swoopo Makes Bank,
I'm not only more and more convinced that Economics is sub-dismal in terms of science, but I am increasingly hopeful that a new discipline is emerging that sits on the intersection of modeling (computing/maths), social networking (including game theory, but allowing for opinion dynamics), and that it might have prescriptive consequences that are based in explanatory descriptions of how the economic world actually, operates and what the real, effective levers are for altering its behaviour in favour of humans who inhabit its spheres.
The behavioural economic models are half way there but lack predictive value. The old free market, Adam Smith fictions are demontrably nonsense (humans are not selfish rational players, and no market in reality is efficient or transparent in terms of information for many obvious reasons) - the two papers/talks above explain why people start to behave less and less the way market-nutters would like them to, just at the worst possible time. They also explain how systems can operate no-where near clearing price (marginal profit) without needing insider trading or other things regulators would like to think are necessary but worse, sufficient to keep the world turning on its monetary axis.
No, there's hope. Not much, and its possible no-one is listening, but maybe .....