You're right externalities are an issue. However, consider rating agencies in the 2008 housing crisis. By not downgrading junk they made the problem worse. If t

You're right externalities are an issue. However, consider rating agencies in the 2008 housing crisis. By not downgrading junk they made the problem worse. If the market worked like a rational market, we'd be better off. Alas, human organizations are not rational sometimes.