It is thus incumbent on us to improve our understanding of the process by which projections of future earnings are translated into asset market value. Even our most sophisticated analytic techniques have difficulty dealing with the interactions among time preference, risk aversion and uncertainty, and with the implications of these interactions for the risk premiums that are embedded in asset prices.
The regulations that were drafted by the Financial Stability Council and adopted by the G20 must be followed to the letter the world over, under the supervision of the prudential authorities. Moreover, I firmly believe that there is a problem of values in our societies.