The myth of an invisible hand?

While preparing for my class, I came across this article in Newsweek about Joseph Stiglitz, Nobel laureate and a fierce critic of the Obama administration's economic stimulus plan. The article wrote about how Stiglitz  won his Nobel price in 2001 by showing how asymmetric information in a transaction can make markets go haywire, giving unfair advantage to one party, which in essence was what the sub-prime crisis was about.  While studying at MIT, Stiglitz says, he realised that if Adam Smith's "invisible hand" always guided behavior correctly, the kind of unemployment and poverty he had seen growing up in one of America's grittiest industrial cities, Gary, Indiana, would not not exist. His proposed solution - is that we develop a balance between market driven economies and government oversight. A little like Singapore maybe? Something for us Economic and non Economic graduates to think about.