in the truck, just leaving the junkyard...
Posted on 09/03/2009 3:42:12 PM PDT by Lorianne
Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy. During the golden years, financial economists came to believe that markets were inherently stable — indeed, that stocks and other assets were always priced just right. There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year. Meanwhile, macroeconomists were divided in their views. But the main division was between those who insisted that free-market economies never go astray and those who believed that economies may stray now and then but that any major deviations from the path of prosperity could and would be corrected by the all-powerful Fed. Neither side was prepared to cope with an economy that went off the rails despite the Fed’s best efforts.
And in the wake of the crisis, the fault lines in the economics profession have yawned wider than ever. Lucas says the Obama administration’s stimulus plans are “schlock economics,” and his Chicago colleague John Cochrane says they’re based on discredited “fairy tales.” In response, Brad DeLong of the University of California, Berkeley, writes of the “intellectual collapse” of the Chicago School, and I myself have written that comments from Chicago economists are the product of a Dark Age of macroeconomics in which hard-won knowledge has been forgotten.
(Excerpt) Read more at nytimes.com ...
I’m a dumba$$ and I saw it coming!!!
Explanation: Daddy Warbucks has lots of money. He passes out many IOU’s. Daddy is rich, they are as good as gold. Banks accumulate them and lend out 5 times their daddy warbucks iou’s. And so the inverted pyramid Ponzi’s. Then the supply of suckers falters, and down it all comes.
It is hard to take serious economists who cannot see the destructiveness of government interference.
bump...only read about half...it’s a good review of econ so far. Perhaps the controversial stuff comes later.
I’m not saying Krugman isn’t a horse behind. He is, but the article is balanced so far.
Krugman......get a real job.
Teling stories is so unbecoming....
in the truck, just leaving the junkyard...
The biggest problem, in my opinion, is that the problems occurred because these institutions were not working in a 'market economy' where they would have to take full financial responsibility for their decisions. They worked on the idea that the government would insure all their messes, so they made loans and investments for which they knew they would be insured, if the deals went South. Because of this, a LOT of people got loans who would not have gotten them a few years before, because they would have been judged not qualified, because of their precarious financial positions. When the economy moved into recession, some lost their jobs, and because they had made 100% mortgages, they were immediately upside down, because real estate took a downturn, as well.
Krugman’s an economist. Where in the article does he cite his prediction?
The morons over at the NY Times are totally clueless. Ok, for all you dimwits here is the answer to your question:
They didn't get it wrong, they are doing in INTENTIONALLY in order to DESTROY the U.S. economy in order to usher in a socialist, communists, Marxist system that will overthrow capitalism in America once and for all. That is the answer but you will not believe me or the facts that are staring you right between the eyes because you have drunk the Obamessiah's KOOL AID and REFUSE TO SEE.
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