Economists Out to Lunch

what? I don't know of one economist that didn't see the real estate collapse coming. This is the cause of the mess. We gave to undeserving people mortgages and homes. We gave them a shot. Who are you referring to?

What about accountability?
If doctor says that vodka and drugs is the best cure - he will lose his license.
If lawyer says that stealing is good - he will be disbared, unless he is in Obama teem.
But when BRIBED economists encouraged us to buy overpriced houses or worthless stocks - they still keep their jobs and money, instead of losing their diplomas or even being jailed.

Wrong. Very wrong. See our comments from 1998:
http://twisri.blogspot.com/2008/11/what-we-said.html

Why the market failed.
http://twisri.blogspot.com/2009/03/why-market-failed.html

Adam Smith on the Current Financial Crisis:
http://twisri.blogspot.com/2009/04/adam-smith-on-current-financial-crisis.html

Another example how actions against common sense backfire. Economists and politicians always try to convince us that economy follows perversed logic which only they can understand.
People are buying triple-overpriced houses - right, it is because we have shortage of homes in America, price will only go up (seriously, it was their argument in several articles). Real estate slump - don't worry, it is short-term, americans need more houses.
Goverment spends more than earns - it is OK, extra-spending stimulates economy, it would be great to spend even more.
Banks invented dollar trees - their good guys, not counterfeiters or thieves. Things went against their predictions - it is too complicated even for them, mortal geniouses, to predict how economy goes.
It is time to wakr up, there are no geniuses on the top, they are ordinary people with IQ lower than average. Believe only common sense, then you will not be in the street with your home forecdlosed.

You can't make this stuff up.

The newest Government Accountability Office Report [ which you may view in PDF form at at website following], again blasts the Obama administration and the Democrat leadership in both houses of Congress for failing to provide oversight to the first Stimpak. Obama was caught in his dishonesty in ''jobs created /saved'' by failing to note that the ''jobs created'' were all in the government sector. Not in the private. [Indeed, the present burgeoning of government is now the largest in American history and would be dwarfed itself by the nine, count 'em, nine brand new regulatory agencies cooked up by the idiotic WAXMAN -MARKEY climate change bill].

This of course has led to predictable results.

To begin with,Obamas approval [and those of the Democrat leadership ] numbers are falling in all polls, the most recent being RASMUSSEN,QUINNIPAC and GALLUP, hence the squeamishness of the ObamaMedia to discuss them. Next, the findings by POLITICO that the Democrats were taking any revenues recaptured as a portion of the original Stimpak repayments and are rerouting these ,not to the ''American people''as Obama promised back in Feburary, but to their own pet projects and lobbyists, who are now spending 1.5 million dollars per day [SUNLIGHT Foundation] in order to push their agendas onto the rest of us who are still not seeing squat for the money we have spent.[we already have some idea, as Jack Murthas pal at COHERENT has been arrested by the FBI for illegal kickbacks deriving from the loot belonging to us that was forked over by Murtha to his benefactors]. From ''surtaxes'' to ''pay for healthcare, to billions being up for grabs to ACORN and other shifty groups, a record amount of taxpayer monies for congressional junkets [ the worst offenders, those of the Black Congressional Caucus and yes, Sheila Jackson -Lees [D-Tx] maudlin performance at Jacksons memorial service was on our dime], to shelling out hundreds of billions to state governments in budget shell games with zero oversight and I mean none, we are all getting the kind of government that we deserve.

www.gao.gov

The Economist July 07,2009 ''Americas Long-Awaited Fiscal Trainwreck Now Underway''

BLOOMBERG July 02,2009:'' Californias Disaster Should Kill Obamanomics''

The Washington Post July 08,2009: ''Don't Add To Debt With Healthcare Reform''

POLITICO July 08,2009: ''Democrats Stuck In Stimulus Jam''

I think many economists did predict the crisis. It's just that they were either ignored or to shut up as Mr. Rubin did to an economist that said hedge funds needed more regulation. There was another economist who was profiled in the NY Times who said a trillion dollar crisis was imminent. He said a trillion dollar figure was not an exaggeration but an accurate statement of the cost of this crisis that would soon hit. So I think that all this talk about no one seeing this crisis is just baloney. Many people did, but they were shunned because other people wanted to make as much money as possible even though it was becoming more and more obvious that a huge market correction was imminent. The only one who was surprised, was perhaps Alan Greenspan, you know him, he's a famous Ayn Rand disciple. She is another phony I think. Here is a person who is supposed to be some sort of economics guru who never owned even a corner store, and never had to implement any real economic policy. Why did anyone think she knew what she was talking about? Anyways some, perhps a lot of people did see the crisis coming, the same way a lot of people saw that the Iraq invasion was going to result in a costly failure or pyrich victory, btw people with influence either shouted them down or ignored them too. I don't know why.

Greed, Greed, Greed and Greed has the world in hock. The statement I am going to make is nothing new, I have said it and read it before. When things are going well, really well, we are complacent, we only jump to investigate after a disaster.
Prevention to me is investigating why the stock market jumped 2000 points in such a short period of time, then another 2000 and it's all good but no one ever questions why. Let's all high five and pat each other on the back and open another bottle of bubbly while we are out on the yacht. We are rich and life is good, I am not exactly sure how it happened but who cares, we're rich. Market drops 4000 points and all of a sudden, what happened, who's responsible, were is my money and champagne?
This is a world wide issue and the US Government played a large roll in this and I don't care if you have a D or an R next to your name, the responsibility is shared by everyone. Past government spending didn't put us in this hole, it just broke ground for the canyon that was created by the housing market, Wall Street Run Wild, Insurance companies and the Madoff's of the world.
Our solution, spend and spend large turn the US Government into the largest corporation in the world with all sorts of new commodities starting with motor vehicles. So we are filling the canyon by digging it deeper. You can't fix overvaluation, you can only bring the price back in line and when that line is 40-60% lower than it was you have a recession that will take a decade to fix. The families that were able to keep their houses can not profit from selling it now or any time in the near future so how will they buy up? You are better off downgrading so if there is an uptick you might make 5% after counting the extreme losses created now.
Our generation is going to struggle though all this but when we are gone what is the next generation going to do and the one after that. We fork over somewhere between 50 to 75% in taxes when you factor in every tax you pay, do we push this to 85-95%? Paying it all back comes down to who, how and when and I think we might want to seriously consider learning Chinese.

I am not an economist but I saw it coming a long time ago. What does that mean? That anyone willing to pay attention to the economic climate and not looking to make a hefty profit off of, well, nothing, should have seen the warning signs. You can't artificially inflate prices and expect them to sustain themselves. I met a lot of snickers if I ever said the housing market would crash. Why? Because a lot of everyday folks stood to make money on a house that had gone up significantly in price but not "value". Same thing with the stocks in the 90's. Economist hold a lot of blame here, but Americans definitely played a critical role here.

Some economists? Many economists? Plenty of economists? Do you have any evidence to support your claims? Other than an op-ed Krugman published in 2005 about the impending collapse of the housing bubble, I have yet to see any evidence suggesting any economist saw this coming. Krugman missed it as well, although he came the closest (and his predictions since the crisis began, particularly with regard to government intervention have been spot on).

I am currently an undergraduate student at an Ivy League school studying economics. I have been fortunate enough to take a few PhD-level courses in economics to supplement my undergraduate studies. The quote, "but often, the models' assumptions depart so radically from reality that the conclusions become useless" is the best explanation of higher-level economics I have ever heard. You (economists) and your over-reliance on mathematical formulas did not see this coming. If you did, you would have shorted the market (or bought puts like Jane Street) and made a fortune.

I took a sociology course freshman year that focused on income inequality. It was painfully obvious then, as it is now, that with property values experiencing exponential growth and median incomes remaining stagnant, even declining for the bottom 60% of earners, a collapse in the housing market was inevitable. I only wish I understood more about economics then to predict what would happen. You (economists) have no excuse.

Audit the Federal Reserve. Legislators are sick of not knowing what's going on inside Bernanke's fortress, especially as the Fed becomes further enmeshed in the nation's fiscal policy. Paul's little bill has become emblematic of a larger movement, one that could spell trouble for Obama's troubled regulatory plan. Ron Paul ??? always an enemy of regulation ??? is now an enemy of Obama. And a mighty powerful one at that.

Brooksley Born saw it coming (urging that the deriviatives market trading the paskaged mortgages be regulated) and Larry Summers and Timothy Geithner shut her down. THese are the same two men Newsweek's boy Obama appointed to oversee getting us out. The media, especiallly Newsweek continues to sugarcoat or ignore anything negative about Obama. Perhaps the media should be regulated. I have always been a proponent for freedom of the press but in the last two elections I realized where it may be necessary in this country.

I am a Democrat, but remember when McCain made that remark in reference to the automobile industry in Michigan in 2008 that high paying, high benefit manufacturing jobs for the middle class, high school educated folks were gone and not going to come back and they were going to have to learn to deal with it. Too bad that he got blasted with a cannon from every direction and from every pundit, political party, and other candidates for telling the truth. It could have been the basis for a discussion in the country about why we have lost our manufacturing advantage and are now at the mercy of financial conglomerates here and overseas governments and their companies that are now buying up our companies at fire sale prices..

What a stupid article. There were plenty of economist that predicted this. The sub-prime mortgages were nothing more than a pyramid scheme. The problem was that: 1) the press did not give them much print, 2) probably because everyone was making out on the sub-prime mortgages, so everyone just blew them off as a bunch of whackos and chicken littles.

Many of us (economists) did predict this crisis. A greedy public, chose to ignore our warnings.