Brad Delong considers the impact

Brad Delong considers the impact of the corporate governance crisis: “But the big costs will come via a higher long-run cost of capital to investing firms as the breaking of trust in corporate reporting causes savers to shy away from whole classes of investments.” Exactly. If the boom was more than a stock-market shell game (it was), the bust must be more than a stock-market pullback. Well-functioning markets require trust. As we’re now finding out, that trust was widely abused.