« Death Dance: Bear Stearns and Carlyle Capital Linked | Main | 'Alltop' Economic News Aggregator »

March 31, 2008



I think we'd all be better off today if McCulley's Boss & all the Bosses of all the pseudo FED-watchers over the last 20 years had limited their pay to the fundamental value of their work.
McCulley asserts, "Particularly in the first quarter (2007), you got compelling evidence that what had been driving prices in the last couple years of the bubble was not fundamentals ...." What about the "compelling" evidence of '04, '05 & '06? Doesn't he read or talk to his own mortgage man?
He talks almost reverently of BB, but in the Spring of '05 BB asserted that our housing prices were "driven by fundamentals". Hello, isn't that when the Housing Bubble popped? Had no one in the Princeton Econ. Dept. entertained or tried to refute the merits of Dean Baker's arguments? Was the FED's "asynchronous" approach to Bubbles accepted there as God's will? What is the role of Economists if they refuse to stand up for the most fundamental of economic principles?
Had BB addressed the housing horror in early '06 he might have shortcircuited a large part of the mess we face. Instead BB's FED waited until the Fall, '06 before signing on to the weakest warning imaginable to "players" (see "Non-Traditional Mtg. Advisory) that they should wind down their game.
It does us no good to beat up AG but give BB our condolences & a free pass. McCulley's latest efforts appear massive rationalizations to me, and the day's too short & his puffery too tedious to refute. Instead, I recommend a light dose of Kevin Phillips as an antidote to anyone looking for a more plausible macro-perspective.

Dave Iverson

I will wait longer, Bailey, before either eating crow re: BB or seeing my suppositions proven at least in part correct. Of course, if BB fails to stick around after the upcoming election I'll not get a chance to see or say much one way or the other. I've read a couple of Kevin Phillips books and at one time believed that times were as dire as Phllips supposes. But now I think our systems (LTCM and its various, tragic span not-withstanding) are more resilient than many (including many Austrian economists) believe.

Systems resilience, however, does not preclude moments like we are in when ever-more-tightly-coupled systems trend toward gridlock and implosion and/or explosion. What happens the the wake of the meltdowns and blowups re: regulatory reform will prove to be where we need to focus our attention. Will we make our systems better and more resilient? Or will we, as Greenspan did (with Bernanke not too far from standing at his right hand), just set the stage for even bigger and more-frightening bubbles?

So have patience with me as I continue to hope that Bernanke is more and better than 'Helicopter Ben'. And keep prodding me to rethink my views when I get too wild in my thoughts/perspectives.

Postscript: Tragically not many regular people (me and you included, likely) know enough to hedge our bets carefully enough so as not to be cannon-fodder in the structured-finance geopolitical games that are in play. Either we need much better consumer information/education systems to help people manage their money throughout their lives, else we need a much-tamer global capitalism system. The former is what I hope to work a bit on in the next few months (mostly finding what others have done). The latter is something to hope for, but not to depend on seeing anytime in our lifetimes.

The comments to this entry are closed.

Want Email Updates?

Your email address:

Powered by FeedBlitz

* Google * Site-Search


  • Chronicles of international finance and geopolitics, with hints from thither and yon to help us find a way from "growth and development" to "sustainability."

    This is a personal web site, reflecting only the opinions of its author and those who offer up comments. It was built and is maintained in occasional spare moments.

    More about me, my other blogs, etc.

Blog powered by Typepad