tag:blogger.com,1999:blog-2499715909956774229.post6349772495678355399..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: Fannie, Freddie, and the TruthStephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger32125tag:blogger.com,1999:blog-2499715909956774229.post-69593484781084954072011-07-15T11:05:53.178-07:002011-07-15T11:05:53.178-07:00"acceptable greed"
A statement without ..."acceptable greed"<br /><br />A statement without content. Why are my preferences up for debate? Why should you get to decide whether my preferences are okay?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-53341661528979836442011-07-12T19:07:16.271-07:002011-07-12T19:07:16.271-07:00As you note, you have not read Morgensohn and Rosn...As you note, you have not read Morgensohn and Rosner's book, neither has Thoma I would guess. Going through the index, CRA does not show up prominently. I suppose every reviewer just reads his/her own prejudices into the book. My reading is that the main claim of the book is that the Fannie management was manipulating Congress and pushing regulators around to achieve its performance goals and get its bonuses. I am not sure if Fannie was that effective at it, but suppose it really was the bully M&R describe, and that it wasn't alone in that. Does that have any implications for the summary you offer in your previous post, that "It's all about the government"? I mean, the laws/regulations that constrain the environment Fannie and other financial institutions are operating in are not coming out of nowhere, and these institutions were and still are very much aware of that. Its not just about being greedy within the rules, its about changing/interpreting the rules and thereby defining what is acceptable greed and what crosses the line.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-86000499187895355062011-07-11T11:28:31.270-07:002011-07-11T11:28:31.270-07:00"My you *are* bitter you never got accepted a..."My you *are* bitter you never got accepted at Harvard, aren't you?"<br /><br />Ah, but I did.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-1354010467951110672011-07-11T02:33:44.792-07:002011-07-11T02:33:44.792-07:00"Quit pretending to know economics, it won..."Quit pretending to know economics, it won't do you any good here. If you want to seem smart, try Marginal Revolution -- nobody there knows any economics at all. "<br /><br />My you *are* bitter you never got accepted at Harvard, aren't you?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-67915028396169939402011-07-08T13:30:38.398-07:002011-07-08T13:30:38.398-07:00"So we can check who is right by asking other..."So we can check who is right by asking other people, "Do you think it was a bubble?" Care to be how that will pan out?"<br /><br />About as well and meaningful as asking Sarah Palin if dinosaurs played with people. Asking people who don't know the answers is not useful. Quit pretending to know economics, it won't do you any good here. If you want to seem smart, try Marginal Revolution -- nobody there knows any economics at all.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-68022735337720752552011-07-08T09:55:31.289-07:002011-07-08T09:55:31.289-07:00So if 500 years ago I wanted to know whether the w...So if 500 years ago I wanted to know whether the world is round or whether the earth sat in the center of the universe all I had to do is go around and ask people? (you may be surprised if you try doing this even now).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-38702042358775373002011-07-08T05:58:36.303-07:002011-07-08T05:58:36.303-07:00"By the way, I can define red. Red is the set..."By the way, I can define red. Red is the set of colors close to the color of a cherry."<br /><br />!!!! <br /><br />"If you and i disagree about whether something is red or green it is pretty easy to check who is right."<br /><br />Which is not the same thing as providing a definition. We check who is right by asking other people, "Do you think that is red?" Similarly, in the recent run-up to housing prices in the US, we two seem to disagree. So we can check who is right by asking other people, "Do you think it was a bubble?" Care to be how that will pan out?The anoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-33510180452645857692011-07-08T04:05:17.764-07:002011-07-08T04:05:17.764-07:00For neophyte epistemologists, this is a good start...For neophyte epistemologists, this is a good starting point on the state of the art of the philosophy of the matter<br /><br />http://opinionator.blogs.nytimes.com/2011/06/29/argument-truth-and-the-social-side-of-reasoning/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-64138090678891789542011-07-08T04:01:07.336-07:002011-07-08T04:01:07.336-07:00I am not. Thhis is the core of what science is abo...I am not. Thhis is the core of what science is about. If you can't substantiate it, it is meaningless.<br /><br />By the way, I can define red. Red is the set of colors close to the color of a cherry. As it turns out you can associate it with some frequencies of light. If you and i disagree about whether something is red or green it is pretty easy to check who is right.<br /><br />RVAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-60748515813181681672011-07-08T00:36:56.235-07:002011-07-08T00:36:56.235-07:00"Actually, I'll make it easier for you --..."Actually, I'll make it easier for you -- define a bubble"<br /><br />Um, this goes under the fallacy of "unless you define your terms, you can't make true claims." I can know an object is red without being able to define "red". <br /><br />Are you actually claiming there *wasn't* a housing bubble? Be a man (or a woman) then, and come out and say it. C'mon, make the claim, in the unambiguous form, "There was no housing bubble," and see how little people take you seriously, and rightly so. Instead, you hide behind a burden-of-proof argument.<br /><br />"How do you know a claim is true if it is hard to substantiate?"<br /><br />There are many, many claims which are hard to substantiate which can be known to be true, under the normal meaning of "know". You're just playing semantic claims.The anoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-10025774552794918932011-07-07T09:22:43.745-07:002011-07-07T09:22:43.745-07:00whether "most economists" failed to spot...whether "most economists" failed to spot a bubble is irrelevant. congress did not allow the GSEs balance sheets to "balloon based on what economists told them about house prices". they did so because they were incentivized to do so by campaign contributions and by voters (who like government subsidized mortgages).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-8090366596863551402011-07-07T07:25:15.287-07:002011-07-07T07:25:15.287-07:00"And anyway what's the problem with makin..."And anyway what's the problem with making a claim, even if hard to substantiate, so long as it's true?"<br /><br />How do you know a claim is true if it is hard to substantiate?<br /><br />-RVAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-17495987791548160772011-07-07T07:13:01.241-07:002011-07-07T07:13:01.241-07:00To above commenter -- prove to me there was a bubb...To above commenter -- prove to me there was a bubble. Actually, I'll make it easier for you -- define a bubble and give me an empirical method for detecting them. You don't even have to prove there was one this time, only that they can exist at all.<br /><br />Good luck. I'm guessing you'll fail.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-65903777506017031782011-07-07T01:41:58.851-07:002011-07-07T01:41:58.851-07:00"what is "most"? which "econom..."what is "most"? which "economists"? academics? central bankers? wall street economists? there is no way to substantiate such a vague claim."<br /><br />Nonetheless the FRB paper cited above says things like, "The small number of economists who argued forecefully for a bubble..." Is that also a vague claim? And anyway what's the problem with making a claim, even if hard to substantiate, so long as it's true? Or are you saying there is a long list of economists - define the term as you will - who argued forcefully for a bubble? Or are you just playing the "burden of proof" game? You know the claim is true, don't like it, and thus try to confuse the issue by imposing a burden of proof on the poster, which you wouldn't accept yourself?The anoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-51114889183500820342011-07-06T15:18:40.063-07:002011-07-06T15:18:40.063-07:00The question of whether academic economists were a...The question of whether academic economists were assigning the most accurate probability of a crisis given available information at the time is unanswerable, so why are we even discussing it?<br /><br />A more interesting question is whether there was any identifiable source of bias. Are there characteristics of macro-economists that would make them more likely to have called the crisis? Perhaps work with historical/emerging market data? Links (or lack of links) to financial industry? Employment at the Fed or in academia? Publications in major journals? Any other?<br /><br />-RVAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-92147732285210531462011-07-06T12:27:52.698-07:002011-07-06T12:27:52.698-07:00"Who was [sic] blame? Most economists"
..."Who was [sic] blame? Most economists"<br /><br />what is "most"? which "economists"? academics? central bankers? wall street economists? there is no way to substantiate such a vague claim.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-64309551433597960832011-07-06T11:49:06.506-07:002011-07-06T11:49:06.506-07:00In another context, our friend anonymous 1 writes ...In another context, our friend anonymous 1 writes "it was obvious the die would come up 6. Most economists thought it would come up between 1 and 5 but with my special insight, I knew a 6 was inevitable. Economists are useless"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-70792603713392091572011-07-06T10:52:47.298-07:002011-07-06T10:52:47.298-07:00"I'll leave it at that."
Somehow, I..."I'll leave it at that."<br /><br />Somehow, I don't think you will.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-162669405245340242011-07-06T10:04:19.043-07:002011-07-06T10:04:19.043-07:00Anonymous,
The Boston Fed paper you cited substan...Anonymous,<br /><br />The Boston Fed paper you cited substantiates the original claim that I made and Stephen took issue with. I'll leave it at that.Anon1noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-79977883384269339852011-07-06T09:41:38.505-07:002011-07-06T09:41:38.505-07:00"None of the papers cited tried to quantify h..."None of the papers cited tried to quantify how much transitory housing demand the credit markets were creating with low-payment products. If they had looked at this question, they would have determined that once these products saturated the market (leveled out in penetration), house prices would decline. Armed with that knowledge, one could then look at the impact of house price declines on credit markets. The risk was evident."<br /><br />There are so many ill-defined concepts in this paragraph it is hard to know what to make fun of.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-83020068861696878872011-07-06T09:37:32.723-07:002011-07-06T09:37:32.723-07:00you're missing the point, which is that you ke...you're missing the point, which is that you keep making unsubstantiated claims - about economists, about economic research, about the behavior of politicians, about the lending practices of the GSEs, etc.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-75888752923305060752011-07-06T06:27:57.180-07:002011-07-06T06:27:57.180-07:00Anonymous,
The paper you cite reiterates my point...Anonymous,<br /><br />The paper you cite reiterates my point:<br /><br />"The main question that motivates this paper is why market participants were so optimistic— in other words, why they largely ignored the pessimists. Our answer is somewhat surprising: the pessimistic case was a distinctly minority view, especially among professional economists."<br /><br />None of the papers cited tried to quantify how much transitory housing demand the credit markets were creating with low-payment products. If they had looked at this question, they would have determined that once these products saturated the market (leveled out in penetration), house prices would decline. Armed with that knowledge, one could then look at the impact of house price declines on credit markets. The risk was evident.Anon1noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-62724092722094512762011-07-06T05:29:43.030-07:002011-07-06T05:29:43.030-07:00@Anon1 --- the Boston Fed published a paper review...@Anon1 --- the Boston Fed published a paper reviewing what economists said about housing during the boom. Perhaps you could read it before you post more misinformation in the comments section here.<br /><br />http://www.bos.frb.org/economic/ppdp/2010/ppdp1005.htmAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-27961995808516224472011-07-05T21:40:17.912-07:002011-07-05T21:40:17.912-07:00Second Anonymous,
You are entirely correct. I ha...Second Anonymous,<br /><br />You are entirely correct. I have not waded through the macro literature on the causes of financial crises. I am more concerned with what academics had to say in 2006 and 2007 about house prices, shadow bank liabilities, and the banking system's obvious fragility. Gorton's work certainly holds up well. Early on, he correctly identified the dynamics of the 2007 run on shadow bank deposits. I'm sure you will tell me who else was able, through their knowledge of the vast macro literature, to warn us about the dangerously high level of systemic risk. <br /><br />The usefulness of a body of work is not in making point estimates about the future. It is in helping us, the broader public, understand the range of probable outcomes. In this regard, how do you think the academics profession fared?Anon1noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-12054123136021006422011-07-05T21:08:02.377-07:002011-07-05T21:08:02.377-07:00What would you say prevented that research from be...What would you say prevented that research from being utilized then?ziddynoreply@blogger.com