Was it the hammers or the carpenters?

That is the question alluded to this morning by Yale Professor Robert Shiller in the NYT. Shiller is one of my favorite academics working in the field of finance. He tries to (diplomatically) argue we can prevent future crises if only we had better econometric tools. I would counter that future crises could be avoided if only we had less economists who were fools.

Lets look at what the Professor wrote:

“There were relatively few persuasive warnings during the 1920s that the Great Depression was on its way, and few argued convincingly during the last decade that the most recent economic crisis was near. So it’s easy to conclude that because we didn’t see these events coming, nothing could have been done to prevent them.

In fact, some people view the recent crisis as just another “black swan event,” one of those outliers, as popularized by Nassim Taleb, that come out of the blue. And it’s clear that a lot of smart people simply didn’t see the housing bubble, the instability of our financial sector or the shock that came in 2007 and 2008.”

Uncharacteristically, Professor Shiller is deeply wrong about this. There were numerous “persuasive warnings” and “convincing arguments” prior to the most recent disasters. They were mostly ignored for a variety of cognitive reasons. It was not that they were not understood, it is that most people selectively refused to believe what was against their own interests. When the potential damages of what might occur is too ugly to contemplate, the silly humans find ways to ignore the truth; we seem to prefer comfortable fictions to painful reality.

And while many “smart people” may not have seen the crisis coming, many did. (Perhaps we need to rethink who we call “smart people” in the future).

It is noteworthy that one such smart person, Professor Shiller himself, had convincingly warned about the dot com bubble in 1999 and the housing collapse in 2005. And he did so using readily available data. So if some smart people did see the crisis coming, and made appropriate warnings, perhaps it is not the tools that are at fault?

Back to the Professor:

“But the theory of outlier events doesn’t actually say that they cannot eventually be predicted. Many of them can be, if the right questions are asked and we use new and better data. Hurricanes, for example, were once black-swan events. Now we can forecast their likely formation and path pretty well, enough to significantly reduce the loss of life.

Such predictions are a crucial challenge in economics, too, and they are why data collection need not be a dull or a routine field. If done correctly, it can be very revealing.”

While having better tools to measure the economy is a good thing, it would not have changed a single thing when it came to the crisis. What matters more than those tools and the data collection format are the institutions charged with overseeing the process, and who is actually interpreting that data.

Back in 2009, we discussed these 10 factors Why Economists Missed the Crises:

1. Inherent upward bias is built into ALL Wall Street research (including economics)
2. Ideological rigidity prevented creative thinking;
3. Non-critical acceptance of official data
4. Institutional rejection of negative analyses;
5. Classic Economic analysis seems ignores human irrationality;
6. Political Bias;
7. Compensation skewed views towards excessive optimism;
8. “Timing” is very different from Analysis;
9. Derivatives, leverage, liquidity a difficulty for traditional economics;
10. Herding instinct is powerful;

Hence, it is not the tools but the fools who were at fault. Even if we had better data — a social good we all should enthusiastically support — it would not have mattered.

Few economists have had more insight into various aspects of behavioral finance than Professor Shiller. His work has been hugely influential in getting more people to see how human cognitive failures lead to significant errors. But it also explains why the data was not what was not the problem.

The fault, dear Professor, is not in our stars, but in ourselves.

>

Previously:
Why Economists Missed the Crises (January 5th, 2009)

Source:
Needed: A Clearer Crystal Ball
ROBERT J. SHILLER
NYT, May 1, 2011  
http://www.nytimes.com/2011/05/01/business/economy/01view.html

Category: Bailouts, Derivatives, Psychology, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

51 Responses to “Uh-Oh: Is Shiller Defending the Failures of Economists?”

  1. JimRino says:

    Let’s not overlook the election of a Republican Administration.
    Mr. Bush signalled to the business community that he would NOT prosecute Fraud.
    He ignored whistle blowers.
    The FBI warned Greenspan about rampant real-estate fraud.

    Just imagine the FRAUD with a Trump or Bachmann administration. That’s when you should move all your assets to gold.

    ~~~

    BR: I’m less inclined to see that as a widespread belief in 2001-07; That belief became more widely distributed after 2008

  2. ilsm says:

    No one would stop the dance!!

    The carpenter or driver has preference to not reject the null hypothesis if the few profitting are going to take less than they feel due.

    The middle and lower classes get the suffering.

    There was a guy blogging called “skeptical optimist” purely MMT, which I have concluded alluded to ignoring bad data preferring the type II error.

    I have not seen to that blog in a long time.

  3. jimcat says:

    Maybe the professor means we need better data about fools. That’s what I’d like to see…an objective fool ranking for the “smart” people.

  4. yoganmahew says:

    Here in NW Europe, a ‘tool’ can be a ‘dick’ (in both senses of the word). So perhaps it would be better to say that “we can prevent future crises if only we had better econometric tools”, i.e. less dicks. Personally, I think fewer econometric tools would also be good. More ‘sniff test’ economics required. If it whiffs of gorgonzola, it might be, er, a tool…

  5. Petey Wheatstraw says:

    Anyone taking a moment to look past the insane ramblings of the “experts” during and regarding the crack-up boom in housing prices would have seen the truth without much difficulty. Mortgage to income ratios far beyond any conservative (safe) threshold, prices of new and existing homes going parabolic without any fundamental shift in the underlying supply/demand relationship, rampant and blatant dishonesty by the players (as well as those being played), and the repeated and ubiquitous refrains of, “buy now, or be priced out forever,” and, “housing only and always goes up,” were all clearly bellwethers (clarion calls, actually), that a shit hurricane was brewing.

    Who could have known?

    Anyone who cared to look.

  6. yoganmahew says:

    PS another addition to your list is the absence of debt as a parameter in econometric models. Steve Keen has been highlighting this for some time. Unfortunately, as you point out in your criticism of wilful ignorance, if you add debt, the models ‘break down’ where ‘break down’ equals showing asset bubbles collapsing…

  7. Sechel says:

    In our society we have no shortage of data. In fact we have too much of it and not enough thoughtful analysis.

  8. Sechel says:

    I would add to your list board of directors not looking out for shareholders. When one examines the public
    companies involved clearly the risk/reward equation was not good for equity holders, yet the directors
    supposedly looking out for shareholders did nothing, yet had the responsibility and duty.

  9. RW says:

    I suspect Shiller is trying to play peace-maker here, trying to give all the (mainly Freshwater) economists who got it wrong a way back into the fold. I also suspect that many of those economists are too arrogant and/or corrupt to take advantage of the opportunity.

    This could well play out over some years as the more promising graduate students make their program selections; some programs will grow, adding professors to handle more students, and others will wither as professors retire or die w/o replacement until some Dean or Board puts their foot down. An old story actually; it’s happened to many programs and departments before, cultures too if it comes to that.

  10. JimRino says:

    I think the business community read the Bush Administrations intentions clearly thru the Bush Appointments to the SEC. I didn’t keep documentation at the time of the NYTimes articles that documented the change in tone. But, Thom Hartmann and Al Frankin noticed the government changes in their podcasts.

    http://www.prwatch.org/
    The center for media and democracy, which has morphed into prwatch, documented the lax regulation early on.

    The Bush administration signaled the change thru legislative proposal’s like: The Clear Sky’s initiative.
    Orwellian Names for legislation: Clear Sky’s: The Clear the Sky of Birds initiative.

    There were a whole host of rollbacks in regulation.
    Let’s not forget the Soviet Secret Police style “oversight” of EPA and NASA environmental studies, where a political minder gets editing power and approval of final reports.

    I think there was plenty of “coded” signals available to the business community, esp. real-estate, to go forward with business fraud with impunity, on the clear understanding that they would not be prosecuted.

  11. foosion says:

    Reliable analysts have predicted 95 of the last 8 crises. When a crisis occurs, the relevant analysis seems totally obvious and we all wonder how so many missed it. Alas, in advance it wasn’t so obvious.

    Read the Krugman, DeLong, etc. posts about economists forgetting useful analysis in favor of modern mathematical models that don’t actually work

  12. JimRino says:

    I believe Capitalism is a powerful economic idea which can do broad good for the nation and the world.
    But, clearly Capitalism can cross a line, when the only goal is profit.
    There are innovators, and there are crooks.
    They both play in the field of business, lax regulation allows the crooks broad power to control and destroy the economic system. The Republican party has lost all ability to differentiate between innovation and fraud.

  13. BusSchDean says:

    We need to avoid searching for and labeling our fools and non-fools. (Remember your parenting training? Criticize the act and not the child.)

    How about if we instead demand to know: 1) transparent answers (i.e., what data supports the answer, why that data, etc.); and 2) the self-interest of the person providing the answer. Even then, as you old Rawhide fans will remember, stopping the herd ain’t easy.

  14. NeutralObserver says:

    Maybe we should take Shiller’s comment at face value and further state, like hurricanes, there is a lot that we can predict about the market with the data we have, and further that it is the humans that are the problem. Perhaps we are at the point where we can turn the process over to a rules based system of control. Set interest rates and money supply using a rules based system, perhaps using software modeling and control. Same for real estate loans; a simple system requiring 10% of your own cash and payments not exceeding 30% of household income. What about the shadow banking? Could rules be developed to control shadow banking as well? Or should we just banish it to the Caiman islands?

    That old quote from Upton Sinclair still applies: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” The human capability for denial is truly amazing. Let’s admit that we can’t control our own impulses, take the joy stick away from the humans, and give it to a machine. Ah, but what to do about politicians and their meddling (e.g. removal of Glass-Steagall)?

  15. you know, on the Links, it can be heard: “Tonto, it ain’t the Arrow, it’s the Indian..”

    past that, ‘Economagicians’ have been lamenting their ‘Tools’, since the Dawn of that (psuedo-) Science..

    LSS: those Jokers could be give a cross(-bred) between Carnac + ENIAC (or ‘Watson’, if you prefer), and, still, be heard howling: “b.b.b.but, We need more Data, better Tools, more Regulations, less Uncertainty..”

    That Crowd won’t be happy until the ‘Economy’ is so shot-through with Plasticizers that nothing moves (w/o the proper Paperwork issued from Command Centrale)..

    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Carnac+Johnny+Carson
    http://search.yippy.com/search?input-form=clusty-simple&v%3Asources=webplus&v%3Aproject=clusty&query=Eniac

  16. dhuv says:

    “I would counter that future crises could be avoided if only we had less economists who were fools.”

    Barry, I completely agree with you. But I do not understand why the debt based monetary system is not being called out for what it is, *unsustainable*. That has to be the biggest problem.

    Am I missing something?

  17. JimRino says:

    Is it a coincidence that Pennsylvania gets a Republican Governor and EPA regulations, esp. on Fracking get rolled back? Here’s an example of how the Fracking community considers the urgency of fracking leaks of cancerous chemicals and spills.

    http://www.propublica.org/article/response-to-pa-gas-well-accident-took-13-hours-despite-state-plan-for-quick

  18. louiswi says:

    There is an oscar winning documentary called “inside job” that should be must viewing for all of us. The short story-lots of crooks, no arrests or convictions because Washington and the regulators as well as the academics and wall street types were in it up to their frickin’ eyeballs. And, they are still at it!

  19. Jim Greeen says:

    In a follow up to Petey Wheatstraw Says: How in the world can Greenspan and Bernanke have one iota of credibility left when they both claim ” they never saw the housing bubble coming? With the voluminous data that was available…how? Maybe the claim that there are ‘none so blind as those who will not see’ applies

    Economic bubbles are one of the most studied areas in economics. To say, as Al and Ben did, on numerous occasions, that they saw nothing is nothing more than the utilization of the Sergeant Shultz defense.

    Why they are still listened to remains a mystery unto itself.

  20. What about the next leg of this crisis?

    Rather than look back, why not forward?

    Are not precious metals signaling another crisis, perhaps a run on the dollar?

  21. contrabandista13 says:

    I’m sorry Barry, I do not agree on the ” these 10 factors “…. Nor the order….

    1. Collective fraud….

    The ones that you mentioned

    12. Someone put Ex-lax in the Kool Aid…

    Best regards,

    Econolicious

  22. Terry says:

    Econometrics will NEVER capture the reality of the economy or the marketplace precisely because it is totally logical.

    Human beings are not–and never will be–totally logical.

  23. louis says:

    “Why they are still listened to remains a mystery unto itself.”

    They are merely pawns and fronts for the higher ranking chess pieces behind them. Follow the Money.

  24. faulkner says:

    As a fan of Shiller’s work (I recommended him for your conference), I am also disappointed. In addition to easily accessible data, we had (almost) MSM stories as early as the cover of Harper’s May 2006 issue.

    This claim to ignorance (unfortunately) dovetails nicely with de Soto’s report on the ongoing “Destruction of Economic Facts.” Bankers and their enabling economists can claim, “We didn’t know … and we are more unlikely to know in the future.”

    Accurate economic data is becoming an increasing valuable commodity. I’m investing there.

  25. VennData says:

    “What matters more … who is actually interpreting that data”

    Silver’s going up! It will continue to go up! The fools that run our country…

    http://www.favstocks.com/donald-trump-calls-american-leaders-stupid-in-las-vegas-stump-speech/2951464/
    http://ishare.rediff.com/video/advertisements/glenn-beck-on-gold-coins-and-goldline/569841
    http://www.huffingtonpost.com/2011/03/25/the-craziest-things-miche_n_840503.html#s257568&title=McCarthwhat

    … are going to ruin it, I predict it! I know it, because I HATE them, and that’s all the expertise I need.

  26. Asymptosis says:

    Even if we cannot predict (with any accuracy) when financial crises will occur, we can discern the conditions under which they are more likely to occur.

    You can’t say that a person is going to get cancer in the next five years. But you can say, given certain conditions, that a person is more or less likely than others to get cancer. And you can quantify those odds, and the odds that those odds are accurate.

    Shiller’s pretty good at this. Would that other academic economists were as well.

  27. Asymptosis says:

    P.S. Note that I say “financial crises” not “economic crises.” The former is pretty much uniformly responsible for the latter — for the so-called “business cycle.”

  28. Vilgrad says:

    All of the booms and bubbles since 1913 were predictable.

    http://www.theburningplatform.com/?p=15003

  29. mgkurilla says:

    A major failing in economics seems to the inability to understand that something going on can be good and bad depending on the time frame you are evaluating. A bubble in formation is good for all those with time horizons that are very short (like traders), while beling bad for those with longer timeframes in mind.

    Unfortunately, our society has tended to become more and more near-sighted and so we end to devalue any opinion that requires a longer time perspective. Look at politics right now. Anyone running for electionin 2012 is only worried about and interested in what the economy looks like in Nov 12 and doesn’t care about beyond.

    At the same time, we have become more of a herd mentality, momentum driven mob. For example, unployment goes up – that’s bad, but it means the Fed will keep interest rates low – that’s good. So how does it affect the stock market; however the herd thinks it should.

    Until economists develop a methodology to delineate various timeframes, they’ll all be talking past one another and only create confusion, rather than a clear understanding and agreed upon implications.

  30. MayorQuimby says:

    BR- ****SPOT ON****

    “most people selectively refused to believe what was against their own interests.”

    Goes RIGHT to the heart of most human fallibilities.

  31. M says:

    Perhaps you are missing a bit of sub-text here. I think the professor is suggesting that a kind of thinking that is data based and tested by prediction should be at the core of economic thinking. The sub-text is those kinds of methods have not been popular or profitable in the “profession” for several generations. “Theories” that are largely abstract and tested by fitting to selected data tend to make fine interpolaters and horrible extrapolaters but that is the kind of stuff that’s been getting published as economics for a very long time now… I think it is this that RS is speaking out against.

    ~~~

    BR: Agreed — you may be onto something here

  32. Lx says:

    ok, 2 “net” problems with dr. shiller’s reasoning (that should be emphasized):

    1. too much of what was going on, in the housing & related financial instruments “industries” was happening IN THE DARK. the data WAS NOT AVAILABLE for analysis.

    &

    2. the (limited) data that was available, was FAULTY. the people running the show weren’t doing the fact-checking OR the math properly; they were too busy cranking out toilet-paper grade investments…

    ~~~

    BR: The 3 main metrics — Median Income / median home price; Housing capitalization as a % of GDP; Cost of renting vs Cost of ownership — was widely available

  33. econimonium says:

    I would put in this same category the people who keep screaming about Bernanke and “the FED”, or use the term “fiat” insouciant abandon, or talk about gold other than buying it in a Patek Philippe timepiece.

    Obviously the policies of the Federal Reserve have, so far, prevented a VERY large crack-up. I want to see how the movie ends but so far, they appear to be wearing white hats. It will be funny because the cognitive dissonance will spread to most of the commentators here, as usual. They’ll tell us why their not wrong even though the world continues on better and not listening to them. Sort of like the libertarians.

  34. wildebeest says:

    Comparisons between economics and the natural sciences continue to astound me. The reason why we can predict the path of hurricanes is that the theories describing their formation and movement are not ideologically dependent. Republicans don’t have different theories to democrats. Lobbyists don’t lobby for an alternative theory of hurricane tracking. Economics is the dismal science because it lacks objectivity and ignores empirical data. Economics is too important to be left to economists (read clowns) frankly.

  35. boveri says:

    ” it is that most people selectively refused to believe what was against their own interests.”
    Beautifully said by the Ritzer.

  36. MacroEconomist says:

    Barry, would you put the Bernank and for that matter Fed as an economist ship of fools? I mean seriously you’d think they’d remember their Econ 101 when it came to their naive assumption that depreciating the dollar would make our terms of trade better (hint with gas over $4, it hasn’t).

  37. MacroEconomist,

    to your point, see ..

    ABSENT US EXPORTER ADVANTAGE

    The US exporter advantage from a weaker USDollar will not materialize, contrary to the mainstream nonsense that reflect hope more than competent analysis. The economists have lost their credibility after crackpot notions like Green Shoots of economic recovery, like an Exit Strategy from the 0% corner of capital destruction, like the empty label of a Jobless Recovery. Now they have another rotten plank to stand upon that will undermine their credibility further. The central banks have resigned themselves to bring the UDollar down in an orderly manner. They mistakenly believe doing so will stimulate the USEconomy and revive the global economy. Instead, a lower USDollar will lift the entire global economy cost structure and serve to dampen all growth while it leads to starvation in poor nations. They expect the US export trade to pick up and lead the economic recovery. They are mistaken. First of all, the US industry lacks critical mass after decades of dispatch of factories to Asia. The start was the electronics departure to the Pacific Rim in the 1980 decade. The climax was the grand industrial buildup in China with Western investment funds, mostly American. The USEconomy lacks sufficient industry to take advantage of export growth. Secondly, many legitimate industrial advantages are in the possession of companies whose products are widely banned for export. See the advanced computer systems, the advanced telecommunications systems, even some advanced bioengineering systems. They fall under the province of national security. Lastly, a much more engrained cancer will affect the few American exporters that can attempt to exploit a lower USDollar exchange rate. It is the cancer of rising costs.

    Most global currencies are rising versus the US$, so the USEconomy is actually hit much harder than other economies, and thus the domestic competitor firms. The lower USDollar will be offset by steadily rising costs, eliminating any exporter advantage. The cost squeeze is so profound in fact, that some of the US exporters will simply go out of business from vanished profit margins and a damaged customer base that is squeezed by global food & energy costs. The US export business costs will rise even more than the USDollar will fall, from rising input costs and even rising federal mandates like health care. Most other nations have less of a cost shock than the United States. The domestic US export industry cost shock eliminates the entire USDollar exchange rate advantage, something so basic that it cannot be seen, and surely not admitted for its heavy political effect. The higher cost of food & energy is painful enough. Americans who believe the export advantage will lead to new jobs possess a shallow comprehension of the important dynamics. By denying the cost shock, it does not enter their thought process.

    Conclusion: A paradox with backfire is at work. The US export industries will not be able to take advantage of a lower USDollar exchange rate, since their costs will be the fastest rising in the world. The commodity prices are rising faster versus the USDollar than almost all other currencies. No USEconomic recovery will occur, but instead a massive deterioration will unfold as it hits the wall from rising costs….”
    http://www.kitco.com/ind/willie/apr282011.html
    rest of monograph is worthwhile, as well..

  38. beaufou says:

    “Is Shiller Defending the Failures of Economists?”

    No, he is making a good living arguing against regulations.

  39. socaljoe says:

    If you think the inflating and bursting bubbles we have been experiencing constitute black swan (very low probability) events, then you are using the wrong models. Using austrian economic models these events, but not necessarily their precise timing, can and were predicted with considerable regularity.

    Or you can simply look at the chart of an asset class… if the price deviates from the long term trend by more then a few standard deviations, it’s probably a bubble and it will burst. A child with some basic statistical skills can make the prediction.

    Our failure to acknowledge the bubbles as a society comes from the desire for mass self delusion and the joy that comes from it’s illusion of prosperity.

  40. JS says:

    Shiller was trying to play peace-maker here, trying to give all the economists who got it wrong a way back into the fold.

  41. [...] not happen to read our piece discussing Shillers NYT ciolumn, its well worth your time to peruse it Uh-Oh: Is Shiller Defending the Failures of Economists? PERMALINK Category: [...]

  42. AHodge says:

    academic economists and market “analysts” were two mostly separate sets of foolishness
    But shiller has a point–kind of– for the academics
    he and Talib himself are saying, not black swan, but a lot knowable?
    even “good” modelers ignored the financial meltdown at first because data showed little relation of financial disruption to growth postwar.
    others refused to look at credit
    only money supply
    and many “good” economists dont work in the detail of a short term forecast
    and were just shootin their mouths off.
    others that were forecast focussed did not know doodley about banking and finance,
    the Minskyites and behaviorists like shiller about the only ones with the basic sense of a credit cycle. much less the crushing problems this time

    on the other hand the academics and finance profs have been majority hijacked by the fundamentalist anti- scientific efficient markets types.
    and somewhat astonishingly most have been busy beavering away “proving” they were right after all and stuffing their students with less than zero BS
    and the crash was due to sticky wages and bad policy.
    finance by definition must be nearly flawless
    shiller may be trying to cut the salvageable from the herd

  43. AHodge says:

    by “sticky wages” i mean you did not cut your wages fast enough to keep a job…
    I’m not making this stuff up..thats the theory

  44. DeDude says:

    MEH @ 10:06 PM

    Although he is right that the advantages of low USD rates are somewhat countered by relative lower commodities cost of those we compete with, he is overdoing it and miss the point. If the cost of a product is 50% commodities and you add the remaining 50 % by the labor and processing then yes the first 50% does not gain any competitive export advantage by the decreased value of dollars. However the part of the product value that is added in the US does retain a competitive advantage by the lower rates – and that is the point of the “weak currency” strategy. He might have earned more than a BS earning if he had tried to argue cost of collateral damage from low USD but with sentences like: “The domestic US export industry cost shock eliminates the entire USDollar exchange rate advantage” he immediately turns off any thinking reader.

  45. Doubtful says:

    With so many people making predictions, often with vague
    time frames and sometimes changing their minds from one
    month to the next, why does being correct imply being
    “smart” and not just lucky? With so many talking heads
    it is not that unlikely a few will be right may times
    in a row just by chance.

  46. Bruman says:

    I always like to point out that the causes of the crisis are really more sociological than economic. You take the idea that history and knowledge is written by the winners and combine that with the observation that the buildup to the crisis was relatively slow, so that those who could see the crisis coming could be marginalized repeatedly by those who were benefiting from the buildup, and you get an explanation that explains why plenty of people saw it coming, but nobody bothered to listen to them (and those who were caught in the crisis then claim “who could have known”).

    For me, what caught me by surprise was not the implosion of the mortgage and CDS sector, but how it could take down absolutely everyone within a few days.

    Also, I think it’s important to realize that the reason that the Great Recession has such long-lasting effects on labor markets and the US as a whole is not entirely explained by the financial crisis. Overleveraged consumers and homeowners are an exacerbating feature, but at a deeper level it’s about the competitiveness of the US labor force and where the US economy fits in the global production-consumption chain, particularly now that the credit spigot has been turned off. We still don’t have an answer to that, though it does appear that things are starting to move.

  47. AHodge says:

    So while the models in did not show the credit starvation hit
    worst in the postwar…which had to be “reestimated”
    or just say this is so bad its got to whack us.

    the models could show that
    Stimulus #1 in january 2008 actually worked some, then unwound
    only a model could tell you that,
    the underlying was worse than it looked on GDP in early 2008, helped by the aid bozos said wasnt working
    then the short term rebate and other fiscal aid got pulled.
    a big air pocket just as everything else bad of stage two hit in the summer

    that would include house price and stocks declines hitting spending
    try to estimate that without a model
    Muni and state government stopped spending and hiring, scope that without a model.

    so i have to agree in those cases, if not done, it was the “fools and not the tools”

  48. advocatusdiaboli says:

    “it is that most people selectively refused to believe what was against their own interests. ”

    There in a nutshell is the kernel of wisdom and explanation that underlies the causation of much of history’s human folly.

    Or to put it another way:

    “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”
    —Upton Sinclair

  49. roga says:

    “The fault, dear Professor, is not in our stars, but in ourselves.” Perhaps the fault is in the our stars as it turns out that we are made of stardust… http://bit.ly/j7frzr (Lawrence M. Krauss about the Beginning and End of the Universe / 381 seconds interview)