New Economic Perspectives
The Urgent Need to Save Orthodox Economists from their Crippling Myths
William K. Black | Associate Professor of Economics and Law, UMKC
Tuesday, March 1, 2016
William K. Black — The Urgent Need to Save Orthodox Economists from their Crippling Myths
New Economic Perspectives
The Urgent Need to Save Orthodox Economists from their Crippling Myths
William K. Black | Associate Professor of Economics and Law, UMKC
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7 comments:
Well if your operative theory is "stability creates instability" it is going to be hard to be technically wrong over long periods of time... you will be correct "some day"....
But this is like saying we don't need Newton's Laws all we ever needed to know was "what goes up must come down..."
This is nice example of orthodox incompetence: the OECD arguing for consolidation, i.e. austerity, at the height of the crisis:
http://www.oecd.org/tax/public-finance/50100974.pdf
@Matt: an other case of not quantifying change in any meaningful way...
It's ok to say "stability creates instability", but it's useless if you don't say when this instability will happen according to some variable (be it either time, some sort of ratio, quantity, etc.) so it can be proven/disproved.
At least some people (ie. S.Keen) has/is trying, but otherwise is just more mental masturbation and metaphysics from economists. No empiricism... so falling in the same trap of mainstream economists.
I,
imo Smith does have somewhat of a point... (but you dont make it while supporting the current theories of the academe)
All you see from Black here is correlation, just scratching the surface... it would be like saying... "well we have looked at the crime statistics and black youth are committing all the crime so blah, blah......"
The other thing with all of his "Control Fraud" schtick is that it discounts the regulatory process in any analysis... most caught up by him in this are probably led to believe "well... the banks just lie" when that is not the case and banks must and do respond to price changes for financed items via the regulatory process which this regulatory process is not well understood imo...
Matt,
All of the Minsky folks knew when the shit would hit the fan. When the credit structure went into Ponzi. They all knew it would be "soon", when the collateral was not worth all the bets it was backing up. The fraud just extended the inevitable.
It's not like Black is making stuff up.
It was clear in Dec. 2004 when the FBI released their report on massive fraud in the mortgage industry and the Maestro blew it off as merely some isolated "frothy markets" and that Wall Street could police itself.
I was in CA at the time and saw how anyone with a warm pulse could get a mortgage — no income, no job, no problem. The way it worked was a Bill Black explained. The brokers told the applicants how to fill in the application. Then the rest of the process was rigged, from appraisal to securitization, because there was huge demand for paper.
Ponzi through and through. It was just a matter of time until the music stopped playing, to paraphrase Chuck Prince, and the house of card came tumbling down.
There is a limit on how much land rent can be extracted in a period. That limit is the ability to service debt without selling or refinancing based on increased valuation. The rest is history.
Part of that history is failure to acknowledge the causes. Conservatives blamed the whole thing on the Democratic lawmakers and GSEs that created the conditions for deadbeat borrowers and billed it as a "subprime" issue, even through that was a small part of it.
Acknowledgement of good analysis is still lacking, and as a result the causes have not yet been addressed, and another credit crisis is in the making by the financial sector. One of the reasons is that the causes do not fit the models and the models are regarded as dogma.
Chewie right and as we all know, "eating candy causes tooth decay..."
Who needs pre-Med and all of that needless chemistry...
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