Liberalization, deregulation, and privatization are a large part of the push for a neo-liberal economic agenda by its proponents to get "official authorities [to] create an enabling environment for markets and then let the private sector supply the social good with (according to the theory) maximum efficiency" (Scholte 2000, p.285). Krugman (1995) states in spite of possible and actual negative outcomes, governments have been eager to adopt the programs outlined by the leaders of the Washington consensus at the same time markets have been busy dumping money into reforming economies for two main reasons. The first is the speculative bubble in the financial markets. The second has more to do with sociological rather than economic perceptions in that the seemingly endless number of meetings, negotiations, and press releases concerning financial and related markets converged into a commonsense understanding of economic opinion. In addition, governments adopted the prescribed programs because markets were rewarding those who adopted and embraced these programs. According to Krugman (1995, np), "[p]eople believe certain stories because everyone important tells them, and people tell those stories because everyone important believes them. ...
nsensus has been embraced even if its program results have had devastating effects on many countries and eventually on the United States in the year 2008.
In 2008, the collapse of key American financial organizations sent the global financial system into free fall as credit began to freeze and trillions of dollars in shareholder value were wiped out. European banks wrote down a combined $1.6 trillion due to their exposure from
the United States financial sector (Wroughton 2009). Several of the largest European banks were deemed financially unstable and were either acquired or nationalized with sovereign funds. Within Europe, the financial instability affected Spain and Ireland, which suffered 35 and 50 percent declines in home prices respectively. In Iceland, the three largest banks collapsed when they were unable to roll over foreign debt holdings that totaled eleven times the Gross Domestic Product (Boyes 2009). In the Middle East, a sharp fall in oil prices coupled with the losses from American and European investments resulted in an estimated three trillion dollar decline in the region. Even emerging economies such as India and China reported slower growth due to declines in global consumption and exposure to the United States economic system. It is evident that the regulation of the United States economy accompanied with neoliberal global agenda is detrimental to national and global economies. This paper aims to examine and analyze the problem why current regulation of the economy can be considered as ineffective and eventually detrimental to nation's economic health.
EFFICIENT MARKET HYPOTHESIS
From the practical perspective, economists should bear some blame for current financial and economic crisis for largely failing to recognize the shifting market