I'm a little confused how why you would believe people who follow Hayek are unfamiliar with questions of information asymmetry and borked incentives. After all, don't they form the basis of "The Road to Serfdom"?
I'm confused because everyone who follows Hayek seems to have the solution in hand before they've even heard the problem statement, and that solution doesn't acknowledge those concerns.
I've never heard a self-proclaimed Hayek follower (note that word, follower not thinker) say "I'm worried that the private sector doesn't arrive at the correct incentives in this case" about anything, ever. That's why I'm confused.
You should try reading Hayek, rather than listening only to straw men who claim to have read his books. He was well aware of information problems, externalities, etc. You might dislike the fact that he believes politicians are also subject to these problems, but he is hardly unaware of them.
If you want to see Hayek followers concerned about such issues, go read the blogs of assorted gmu economists (Tyler Cowen, Robin Hanson, Bryan Caplan, etc).
Home prices crashed and then more or less stabilized. So yeah, I'd say the crash was close to an optimal price correction.
http://research.stlouisfed.org/fred2/series/SPCS20RSA?rid=19...
I'm a little confused how why you would believe people who follow Hayek are unfamiliar with questions of information asymmetry and borked incentives. After all, don't they form the basis of "The Road to Serfdom"?