Saturday, June 30, 2012

Michael Stevens — Greenspan and Godley

Alan Greenspan is apparently writing a book to determine why economic models (all of them, he says) failed to sniff out the financial crisis and ensuing recession. “While the models themselves capture the nonfinancial part of the economy rather well,” says Greenspan, “they’ve been wholly inadequate in understanding how the complex financial system works, both in the United States and globally....” 
...as Godley and Lavoie wrote, “[t]he problem now is not so much the lack of appropriate data … but rather the unwillingness of most mainstream macroeconomists to incorporate these financial flows and capital stocks into their models, obsessed as they are with the representative optimizing microeconomic agent.”
Read it at Multiplier Effect
Greenspan and Godley
by Michael Stevens

Anyone know Greenspan well enough to recommend he read Godley and Lavoie before writing anything further? And to introduce him to Bill Black.

3 comments:

Andrew said...

I don't understand why socialism has become such an unpopular word at "polite" parties these days. I slipped it out at a BBQ with some banker frenemies the other day.....For 5 secs there were no other sounds but my heartbeat and the chirruping of crickets.

My lrecipe Is a mixed economy. Monopolies like electric utilities and telecom would mostly be nationalised. I'd have a large state bank and a centralized provident scheme to keep the financial sector real. I'd incentivise credit unions, building societies and cooperative non-profit member based insurance schemes.

Maybe 30% of a sector under government control 30% as consumer/worker cooperatives and the rest under bog standard capitalist ownership would keep competition healthy.

GLH said...

dresiReWhich do you think would be the best book to learn about the economy, Greenspan's or Jimmy Rodgers'?

Tom Hickey said...

Andrew: "I don't understand why socialism has become such an unpopular word at "polite" parties these days.."

Black or white thinking. If it is not "capitalism" then it is "socialism."

As if most of the people could give an accurate definition of either.

It's a dog whistle created by propaganda.