I tend to believe what economists tell me.

[u wan buy dvd?]

Should I stop doing this?

I'm fairly certain mainstream economists agree on some of the more fundamental issues. Real simple stuff, like free trade is good, our standard of living will likely increase over the next few years, that the economy is slowing getting better, that downsizing and outsourcing is beneficial.

I'm also willing to accept that my impression of a mainstream economics is far off. I'll also accept that mainstream economists are biased themselves and that I should take what they say with a grain of salt.

I'll include a poll. I also selected "Disable smilies in text" because this thread is super serious, harumph harumph.

[u wan buy dvd?]

Fuck I thought I could disables everyone's smilies!

[Darmund]

Yeah, it only works for your own post. I wish you could do it for everyone else's.

Of course you realize you've totally fucked up your own thread now, right? It's going to be all smilies and durr hurr.

[GIGObuster]

Before the economic meltdown, and my realization that things like health care costs in the USA are a bubble, I would had voted in favor, but now I have to say that you also have to take them with a grain of salt. When you look at documentaries like the Oscar winning "Inside Job" you realize that many economists have huge conflicts of interest that makes them ignore bubbles.

It seems to me that I would take seriously an economist that would include "crazy agents" to their "representative agents" and "heterogeneous agents" in their models.

But, what typical policy maker or businessman would take seriously an economist that would tell a good number of their clients that they are mad?

[Fenris]

I...I didn't know you could select "Disable smilies in text" for other users.

Can you?

You can't!

That said--there seems to be two basic schools of economics: Us and Them.

If they are on your side ("Us"), then they are good, accurate, fair and true.
If they are on the other side ("Them") then they are scumbags out to destroy the country.

Frankly, what drives me nuts is that the answer is obviously by splitting the difference between them. It's crazy to not cut some spending and lower some taxes when we're in a recession. It's similarly crazy to not increase some spending and increase some taxes when we're in a recession.

For example, cutting capital gains taxes works to boost the economy--it promotes investment. You will never, ever hear side A admit this. Increasing middle and upper bracket income taxes works to increase tax revenue to the government. You will never hear side B admit that.

It makes a ton of sense for the government to "prime the pump" during a recession--hiring people to build roads, getting people back to work so they have funds to spend in the economy, thus spurring sales, thus spurring manufacturing. It also makes a ton of sense in a recession for the government to stop bleeding money to useless Federal departments that don't do much but take money from one state, skim some off and give the rest to another state. And getting rid of silly frivolities like the National Beekeeper's Museum or the American Alpaca Association also makes sense.

If you think of it like a household, if you don't have enough money to pay your bills, it's ok to go deeper into debt to cover medical bills so you can keep working, but not so much to buy a new 68" plasma screen tv.

However, "Us" and "Them" are more like religions nowdays than a science, so the two sides will never, ever, ever get together.

So...no. Don't trust them.

[u wan buy dvd?]

That's a good point. I sometimes am drawn towards crazy agent type models, which most certainly are not (yet) considered mainstream.

[WednesdayAddams]

While I generally accept the numbers given by legitimate economists who are able to back their figures with research, I will still look for corroboration from other economists just to be sure it's factual. I like Paul Krugman; I think he's brilliant. He's still human, hence he still makes mistakes occasionally. Macro economics is an incredibly involved field that requires a lot of study. If you're going to find someone to trust, at least make sure that person has more integrity and gravitas than this guy.

Also, google 'Starve the Beast.' It isn't just some phantom theory.

Edit: at Gigo.

[u wan buy dvd?]

And I'm just talking about the stuff that mainstream economists would agree on. Guys like Krugman, people on the Council of Economic Advisers, professors at Princeton and MIT. These people generally build on Keynesian theory and would probably agree on something simple like trade but not necessarily something as complicated as the Bush tax cuts.

[Lounsbury]

Insofar as my graduate degree is in economics and finance (and I do real proper business), I find 90% of the naive critiques of economics to be laughable and largely illiterate. That largely holds here.

It is a discipline that is 'soft' without clear objective answers in a lot of areas (for lack of reliable and sufficient data as often as not).

Contra the popular view, among properly trained people there are some clear zones of agreement, but "on the margins" lots of debate.

Originally Posted by mswas

The problem is, you can find an economist who will support just about any position.

Well, that you could say about just about any bloody thing.

Originally Posted by u wan buy dvd?

What might be the reasons we shouldn't trust the consensus of these professional economists?

Ignorance?

It is a fuzzy subject and many of the issues in public debate are in the fuzziest most controversial areas.

Originally Posted by Fish

You want to be considered an economist? It's easy. Take some economics classes. Boom, you're an official economist.

No, mate without a graduate degree in economics you're not going to be seriously taken as an economist.

Get a job at a bank or a brokerage firm and qualify as an economist on the basis of professional experience.

Normally in either of those posts you need at least a masters and usually a PhD to be called "economist" rather than analyst or some such.

Then do some statistics on the economy and get it printed in a local paper with "I'm an economist" written in there somewhere.

Well shite local papers are credulous in almost any area, so I don't know what this says at all.

There really is no agreed-upon standard for who an economist is, or what his credentials must be. Never, never listen to anybody who calls himself an economist unless you know a) who else calls him that, and b) why they call him that.

Fair enough, but in my world if one doesn't have a graduate degree in economics one is going to be laughed at in making the claim.

But that is like being a Historian or Socialogist.

Economics is called "the dismal science." According to An Incomplete Education that's only half-right; it is dismal. Economists make simplified models and generous assumptions, pretend they can hold all market factors steady and change one thing (waving their hands and using the magic words ceteris paribus). Economics, a science? No: science is repeatable.

normally they say human science, which is a bit of a weasel, but no worse than for sociology. Using simplified models is not the problem, the problem is that there needs to be more attention to moving beyond those models now that new data, methods, tools have emerged. The people in behavioural economics are doing so, and will be a long term revolution.

Originally Posted by u wan buy dvd?

And I'm just talking about the stuff that mainstream economists would agree on. Guys like Krugman, people on the Council of Economic Advisers, professors at Princeton and MIT. These people generally build on Keynesian theory and would probably agree on something simple like trade but not necessarily something as complicated as the Bush tax cuts.

Aside from politics, no proper economist thinks the Laffer Curve is an effective description of taxation in the economy.

Originally Posted by WednesdayAddams

While I generally accept the numbers given by legitimate economists who are able to back their figures with research, I will still look for corroboration from other economists just to be sure it's factual. I like Paul Krugman; I think he's brilliant. He's still human, hence he still makes mistakes occasionally. Macro economics is an incredibly involved field that requires a lot of study. If you're going to find someone to trust, at least make sure that person has more integrity and gravitas than this guy.

Also, google 'Starve the Beast.' It isn't just some phantom theory.

Edit: at Gigo.

Krugamn is a trade economist, and very good in that area. Being a trade economist doesn't make him an expert in financial or investment issues, or a number of other things he thinks he is expert in. But he is a good economist within those limiits.

[Fish]

Originally Posted by Lounsbury

No, mate without a graduate degree in economics you're not going to be seriously taken as an economist.

Demonstrably false; Ben Stein (for some reason) is taken seriously as an economist, publishing articles on same, and his degree was in law.

This has nothing the fuck to do with Economists or macro econ. Bank runs were (and are) mass panics, not intellectual consensus.

Who said anything about intellectual consensus? Not I. There are many forms of consensus, some more statistically reliable than others. You know as well as I that the herd is not always correct.

As regards risk management and investment, and the specific title for the people upon whom banks rely for investing, I admit you have experience I do not have. However, I will say that the term "economist" is so loose and unregulated that one can masquerade as an "economist" practically at will, no matter what one's job title is. The people whose job it is to manage money and analyze markets — whether you call them economists or something else — are not always right. Even when they are right, they're not necessarily looking out for anybody but themselves.

[u wan buy dvd?]

Originally Posted by Fish

Demonstrably false; Ben Stein (for some reason) is taken seriously as an economist, publishing articles on same, and his degree was in law.

When I said "mainstream economist" I didn't for a second mean Ben Stein. Why is it the fault of economists everywhere that Stein would be taken seriously and not the fault of journalists who ask him to comment on shit?

[WednesdayAddams]

Originally Posted by Fish

Demonstrably false; Ben Stein (for some reason) is taken seriously as an economist, publishing articles on same, and his degree was in law.

Is he, though? I thought he was a speech writer with a really good knowledge of history and general politics. Economics doesn't even come to mind when I think of Ben Stein.

[Lord Blackmore]

Originally Posted by WednesdayAddams

Is he, though? I thought he was a speech writer with a really good knowledge of history and general politics. Economics doesn't even come to mind when I think of Ben Stein.

Whenever I think of Ben Stein, I think of "Bueller, Bueller"

In any case, I've definitely heard Ben Stein called used as an economist before.

[Lounsbury]

Originally Posted by Fish

Demonstrably false; Ben Stein (for some reason) is taken seriously as an economist, publishing articles on same, and his degree was in law.

What?

Ben Stein as far as I know is a popular media blabber on INVESTMENT - a complete idiot, but not an economist.

Taken seriously as an economist? Where, what evidence? (I have the impression he is a jabber on TV about investing, which is unqualified to be, which does not in my book qualify as 'taken seriously as an economist.' If he is cited in some proper non-idiot sourcing as an economist, I shall eat my words, but as I understand things this merely confirms to me the confusion of terms).

Unless of course you are talking about the universe of people who can't distinguish between the concepts of Financial Advisor, Investors, and Economists. Different concepts. Rather like going to a dentist for a heart problem. He's a Dr. after all.

Who said anything about intellectual consensus? Not I. There are many forms of consensus, some more statistically reliable than others. You know as well as I that the herd is not always correct.

Yes, indeed. But what the fuck that has to do with the subject of academic consensus escapes. Academic consensus is not statistical and can't be statistical.

As regards risk management and investment, and the specific title for the people upon whom banks rely for investing, I admit you have experience I do not have.

Well there we are. Economists have many sins, excessive abstraction among the classical school, the Random Walk and Perfect Markets among the financial markets theorists (that us practitioners sneer at), but those are strategy / long term.

The sins you attributed are not theirs as such.

However, I will say that the term "economist" is so loose and unregulated that one can masquerade as an "economist" practically at will, no matter what one's job title is.

I grant readily that like ANY SOCIAL SCIENCE that particularly to the general public any cretin can claim to be an economist. And not all economists are created equal relative to training. And further that if one knows fuck all about economics, sadly generally the case in the general public, it is easy to sell any kind of shite. But this is not specific to Economics as such.

The people whose job it is to manage money and analyze markets — whether you call them economists or something else — are not always right. Even when they are right, they're not necessarily looking out for anybody but themselves.

Well.... again they're not the same bloody people. ECONOMISTS ARE NOT MONEY MANAGERS AND VICE VERSA. Period. confusing the ideas, as I noted supra is like confusing dental hygienists, cardiologists, and dentists.

I shall not defend money managers - particularly retail managers.

And as to this "even when they are right, they're not necessarily looking out for anybody but themselves" the ancient phrase Caveat Emptor applies.

Or in short, in the real world, if someone is selling you a product, you must assume that they are looking out for themselves. now the better actors think long term. But effectively finding them is another subject.

[Wolf Larsen]

Originally Posted by Fish

Demonstrably false; Ben Stein (for some reason) is taken seriously as an economist, publishing articles on same, and his degree was in law.

Ben Stein is a creationist. I read one of his books. If he told me the sun was going to rise tomorrow, I'd check.

[Jaglavak]

And he hustles Visine to stoners.

[mswas]

Originally Posted by Lounsbury

Well, that you could say about just about any bloody thing.

Sounds like a good reason not to blindly trust experts in any field no?

But with economics, the stakes to support one's pet economic theory because one's partisan political fortunes rest upon it, are high.

[Fish]

You want to be considered an economist? It's easy. Take some economics classes. Boom, you're an official economist. That sounds too hard? Get a job at a bank or a brokerage firm and qualify as an economist on the basis of professional experience. That takes too long? Then do some statistics on the economy and get it printed in a local paper with "I'm an economist" written in there somewhere.

There really is no agreed-upon standard for who an economist is, or what his credentials must be. Never, never listen to anybody who calls himself an economist unless you know a) who else calls him that, and b) why they call him that.

• "Next on FOX news, an economist explains why the government should lower taxes for the rich, privatize Medicare, and cut capital gains taxes." Translation: we heard what position our corporate sponsors want us to flog and we found someone willing to bloviate on that subject.
• "Here at Corruption Brothers Brokerage, we have professional economists to analyze the market to help manage your money." Translation: We want to make money, but we want to convey the impression that we want you to make money too.
• "An economics professor at Georgetown University has a new theory." Translation: The guy does this for a living; there's no mention of anything he might be selling.

Economics is called "the dismal science." According to An Incomplete Education that's only half-right; it is dismal. Economists make simplified models and generous assumptions, pretend they can hold all market factors steady and change one thing (waving their hands and using the magic words ceteris paribus). Economics, a science? No: science is repeatable.

[u wan buy dvd?]

Originally Posted by Fish

There really is no agreed-upon standard for who an economist is, or what his credentials must be.

I don't think there's a universal standard for who Fox is allowed to call an economist. But just like there's the American Psychological Association, there's an American Economists Association. So if we don't just look at Fox for the economic consensus, but perhaps the Survey of Americans and Economists on the Economy
We see PhD holding, AEA affiliated, professional economists tend to agree on certain issues.

What might be the reasons we shouldn't trust the consensus of these professional economists?

[Fish]

Originally Posted by u wan buy dvd?

But just like there's the American Psychological Association, there's an American Economists Association.

There's an Association of Accredited Naturopathic Medical Colleges and an American Chiropractic Association and a Catholic Church but the existence of those organizations doesn't automatically prove that basil cures pancreatic cancer, or a spinal adjustment relieves asthma symptoms, or that God caused the earthquake in Japan. Don't be impressed by groups that hand official accreditations to themselves unless their claims are accurate, useful, and repeatable.

[Fish]

As for you shouldn't agree with a consensus of economists when they tend to agree on things: Wall Street had access to the best economists money could buy and collapsed anyway, making off with trillions in taxpayer dollars and (thus far) facing virtually no criminal charges. Almost no economist was saying, "Jeez, maybe this default credit swap thing is a bad idea." At that point we should be asking ourselves whose side those economists were on.

Consensus does not indicate prudence. The Great Depression was caused in part by consensus (a widespread rise in speculation, a run on the banks). A group of people with similar interests and income may agree a certain course of action is desirable, but it doesn't mean it's the best course.

[Lounsbury]

Originally Posted by Fish

Wall Street had access to the best economists money could buy and collapsed anyway, making off with trillions in taxpayer dollars and (thus far) facing virtually no criminal charges.

This is pure idiotic bollocks.

Economists are not soothsayers nor risk managers nor operational managers.

Nor are Economists particularly influential inside of I-Banks. Rather the contrary.

Almost no economist was saying, "Jeez, maybe this default credit swap thing is a bad idea."

Insofar as that is not what they are asked to do, of course not.

The Risk Manager is asked to do that. And appropriately so as a CDS is a micro instrument which Economics has very little to say about.

One needs to be a financial technician.

The culpability of economics was rather indirect, in the

However, the calls on CDSs are made by Risk Managers who are CFAs, not economists, and there largely the problem was (i) the Traders have more power than the technicians in making calls, since they generate the $$, (ii) the modelling - done by Quants (not economists, actually, but maths and sciences types) proved to be fucked up, based on too little statistical depth (time depth) and a biased history at that.

At that point we should be asking ourselves whose side those economists were on.

At such point you need to be asking yourself if you know fuck all about what you're whinging on about.

Because I can tell you, it is clear to me you don't.

Consensus does not indicate prudence. The Great Depression was caused in part by consensus (a widespread rise in speculation, a run on the banks). A group of people with similar interests and income may agree a certain course of action is desirable, but it doesn't mean it's the best course.

This has nothing the fuck to do with Economists or macro econ. Bank runs were (and are) mass panics, not intellectual consensus.

[Dudley]

Not economists per se, but have you ever noticed how many Certified Financial Planners are broke?

[mswas]

The problem is, you can find an economist who will support just about any position.

[Fish]

The default Lounsbury position: nobody knows anything.

[Lounsbury]

Originally Posted by Fish

The default Lounsbury position: nobody knows anything.

No. When someone talks about something that I actually now, and talks nonsense.

Unless you have a substantive rebuttal, it stands that your comment was not about economists, but about Investment Bank fuck ups, and what you identified was not Economists fuck ups, it was I-Bank management fuck ups.

Unless you have some direct experience with Risk Management structures and know who they hire, etc.

Simple as that, mate.

[Anacanapuna]

Originally Posted by Fish

The default Lounsbury position: nobody knows anything.

Since this is obviously a stupid generalization (as opposed to the intelligent generalization I'm about to make) please allow me to correct you on this point: The Lounsbury default position is that not only does no one else know anything about anything, because he knows everything about everything it is incumbent upon him to argue in the most offensive and belittling manner possible. This is supposed to (1) enhance his credibility and (2) deter people from disagreeing with him.

Aaaaand, because I have a master's degree in rhetoric from a third-rate public university, every argument I make is ipso facto correct and unarguable.

ETA:

&ETA: I forgot to make my main point: As usual, mswas nailed it in his first post.

[u wan buy dvd?]

Originally Posted by Lounsbury

Economists have many sins, excessive abstraction among the classical school, the Random Walk and Perfect Markets among the financial markets theorists

Considering economist's many sins of abstraction and assumption, is it reasonable for me, an average rube, to accept something as true that they'd consider common knowledge, like free trade is mutually beneficial for instance?

[Lounsbury]

Originally Posted by u wan buy dvd?

Considering economist's many sins of abstraction and assumption, is it reasonable for me, an average rube, to accept something as true that they'd consider common knowledge, like free trade is mutually beneficial for instance?

I did not say that.

As for Free Trade, here we get to consensus. Leaving aside wild-eyed lunatics and quaint Marxists, all serious economists - even those of a Left persuasion like Krugman - agree on the fundamental positives in free trade.

Abstraction does not enter into that.

Rather what becomes problematic is how one gets there, and specific policy implementations.

It is worth noting that unlike Free Trade, the efficient markets hypothesis did not have, outside the financial markets community, wide consensus. Even there, it has been controversial.

[Jaglavak]

We should clearly distinguish between economists describing how the machine is connected (which they are pretty good at) versus economists predicting what path the machine will take (which has a much more spotty track record). An economy is like a jungle in more ways than one. You can catalog all the Tootoo birds in the Umptysquat river valley and generally describe their life cycle. But it's a whole different thing to predict the Tootoo bird population in ten years. That is an emergent property subject to major fluctuations from subtle causes.

Also, as long as politicians control the central banks, the money supply and with it the economy will always be cynically manipulated for political gain. But few authors seem to make allowances for a realistic type and quantity of evil.

Economists know a lot of stuff, but they are not technical specialists. From what I've seen, not enough of them consult the technical specialists, which leads to some rather breezy assumptions about resource availability and/or substitution.

Predictions about the economy require a whole raft of input assumptions. Even with teams of folks to follow all the news, at some point you have to guess at what will happen with things like wars and earthquakes. After enough of those guesses the conclusions will be provisional most of the time, even if the models are mostly correct.

These are the main reasons I don't believe the conclusions of the mainstream economists one bit. But there is still much to learn from them.

Finally, I find there is often a big difference between what is written and what is comprehended. Once you get past the basics, your average schmoe can't follow the arguments. So he skips to the last paragraph where the author wraps up his point and that's what he remembers. Except he probably only caught part of it, and a week later he'll probably remember that part wrong too.

[u wan buy dvd?]

Originally Posted by Jaglavak

We should clearly distinguish between economists describing how the machine is connected (which they are pretty good at) versus economists predicting what path the machine will take (which has a much more spotty track record).

I should emphasize that I don't automatically look to economists to tell me what to think about unemployment ten years from now or how to feel about a certain policy. Partly because I don't think economists themselves could reach agreements about such things.

I'm only talking about the things economists generally believe to be true, like how you say "the machine is connected". I'm trusting that economists are unbiased when they say foreign competition, specialization, and technology are economically efficacious.

Does anyone think economists are serving biased ends when they generally agree that the most fundamental theory is true?

Originally Posted by mswas

But with economics, the stakes to support one's pet economic theory because one's partisan political fortunes rest upon it, are high.

But that's a problem of the politicians and not the economists, right? I don't come close to blindly accepting what a politician has to say about the economy.

[mswas]

Originally Posted by u wan buy dvd?

But that's a problem of the politicians and not the economists, right? I don't come close to blindly accepting what a politician has to say about the economy.

My point is politicians on both sides have economists in their pocket. You cannot say you simply accept what they say because they have different views that sometimes conflict with the views of others, and they receive support from people who have a political economic agenda.

[Lounsbury]

Originally Posted by F'ing New Guy

Economies are complex emergent systems. Like the weather. They are controlled by independent agents acting on limited knowledge and with selfish motives. They are driven by feedback and limited communications between agents. And suffer from the butterfly effect.

Economist are like meteorologist is that no matter how much education you have or how detailed your models are you can't accurately predict very far into the future.

Quite, spot on.

Originally Posted by mswas

Sounds like a good reason not to blindly trust experts in any field no?

But with economics, the stakes to support one's pet economic theory because one's partisan political fortunes rest upon it, are high.

I don't think there was any argument made to blindly trust experts.

At the same time naive, unfounded conspiracy mongering comes out of blanket distrust.

As the other points properly differentiate, descriptive and prescriptive / future looking economics are not the same thing. Expecting predictions on relatively precise series of actions to work out is magical thinking in the end, although perhaps unavoidable.

It is also clear that very few people really even have an understanding of first principles.

Originally Posted by Jaglavak

We should clearly distinguish between economists describing how the machine is connected (which they are pretty good at) versus economists predicting what path the machine will take (which has a much more spotty track record). An economy is like a jungle in more ways than one. You can catalog all the Tootoo birds in the Umptysquat river valley and generally describe their life cycle. But it's a whole different thing to predict the Tootoo bird population in ten years. That is an emergent property subject to major fluctuations from subtle causes.

Also, as long as politicians control the central banks, the money supply and with it the economy will always be cynically manipulated for political gain. But few authors seem to make allowances for a realistic type and quantity of evil.

Although I entirely agree with the first paragraph, the second is silly. Unless one substitutes "human beings" for politicians.

For the most part, central banks are fairly well insulated from direct political manipulation in the developed world and ever more so in the developing world. Central Banks largely operate at about as a disinterested / technocratic level as possible overall.

Of course when you have human beings rather than abstractions in operation, emotion, interests come into play.

Economists know a lot of stuff, but they are not technical specialists. From what I've seen, not enough of them consult the technical specialists, which leads to some rather breezy assumptions about resource availability and/or substitution.

There is a disconnect between the Micro focused operators and the Macro operators. Only recently have more complex models become possible, and the financial crisis - which in part comes off of naive use of some abstract modelling that the Quants (a diverse body of people in the I-Banks and Hedgies, but largely maths and sciences people, not economists) developed off of that.

There is, in short, not enough known to marry up some levels of micro economic data (which is noisy, dated and uncertain) with macro aggregates. Although the behavioural school is working on interesting stuff.

Finally, I find there is often a big difference between what is written and what is comprehended. Once you get past the basics, your average schmoe can't follow the arguments. So he skips to the last paragraph where the author wraps up his point and that's what he remembers. Except he probably only caught part of it, and a week later he'll probably remember that part wrong too.

this too is a problem, the lack of understanding of first principles, as well as people who label non-economists as economists, because the person opines on Investment or Financing.

Originally Posted by Anacanapuna

Since this is obviously a stupid generalization (as opposed to the intelligent generalization I'm about to make) please allow me to correct you on this point: The Lounsbury default position is that not only does no one else know anything about anything, because he knows everything about everything it is incumbent upon him to argue in the most offensive and belittling manner possible. This is supposed to (1) enhance his credibility and (2) deter people from disagreeing with him.

My you are so very tender. I don't need credibility enhancement, this is a fucking little message board. The Gweeb is an amusement centre.

Unlike you, I keep my mouth shut about things I don't genuinely know much about.

[u wan buy dvd?]

Originally Posted by Lounsbury

I don't think there was any argument made to blindly trust experts.

I blindly trust to the experts to explain very basic principles without bias. For example, I trust that microeconomics 101 classes aren't designed to pump some agenda.

As far as I'm aware, that's pretty much the entire scope of any real economic consensus- basic 101 principles.

[Jaglavak]

Originally Posted by Lounsbury

Although I entirely agree with the first paragraph, the second is silly. Unless one substitutes "human beings" for politicians.

Are you fucking kidding? Can you say, quantitative easing? The US decision to fully bail out the central banks by buying worthless securities at 100% face value was absolutely a political decision, it indisputably affected monetary policy, and there's no question it is having a strong effect on the economy.

[Anacanapuna]

Originally Posted by Lounsbury

you are so very tender. I don't need credibility enhancement, this is a fucking little message board. The Gweeb is an amusement centre.

Then why waste your precious time and obviously gargantuan intellect? Or is this your very best Sauron impression?

You are a twit and everyone can see it.

[Glazer]

Economies are complex emergent systems. Like the weather. They are controlled by independent agents acting on limited knowledge and with selfish motives. They are driven by feedback and limited communications between agents. And suffer from the butterfly effect.

Economist are like meteorologist is that no matter how much education you have or how detailed your models are you can't accurately predict very far into the future.

[mswas]

I'd also like to point out that unlike economics, some aspects of medicine are directly observable and based off of a solider tradition of experimentation.

Nevertheless every year old medicine is replaced by new medicine. A drug that was rigorously tested, studied and peer reviewed, is a wonder drug one year and a class action recall the next. Medicine is probably the perfect counter-example to Economics as it has so much more resources devoted to the discipline than economics and it is much more rooted in directly observable phenomena. Nevertheless it revises mistakes all the time.

An economic theory on the other hand can take more than a century and hundreds of millions of deaths fought in thousands of little wars in hundreds of countries on half a dozen continents before people finally figure out that it's a bunch of hokum.

[Anacanapuna]

Yeah, yeah. But you know what I mean.

[WednesdayAddams]

Jesus, I watch one basketball game....
[Moderating] 'Puna: I realize Lounsbury gets on your nerves, but at least he's staying on topic. I would thank you to do the same. If you feel the need to call attention to his many flaws, I would direct you to the Pit, where you can dwell fulsomely on each and every foible. [/mod]

[mswas]

Then with a minor in econ, you are armed to analyze it yourself and will learn it more deeply as you go along through life just by reading and understanding essays those of us without that education might tldr.

It is only useful in as much as it enables you to accurately model real phenomena.

[Jaglavak]

Originally Posted by WednesdayAddams

[Moderating]

Hmmm, that's going to cramp my style. Oh well, if it gets to be a problem just let me know I'll take it to the Pit. Or maybe the Box.

Originally Posted by Wolf Larsen

Actually, he knows more about the financial system than everyone else on the board put together.

Yeah, and it's still a crock. You don't have to be a master pipefitter to know a steaming pile of crap when you see one.

Originally Posted by Lounsbury

Well, rather no. In fact rather the opposite of a coincidence, one typically engages in rescues of the firms that are actually in trouble, not random entities. That is rather how it works, which for those of us with actual technical and practical knowledge is not surprising. For the know-nothing lunatics and whankers, well perhaps more surprising.

When one is engaging in the rescue of a company, the first thing one does is to change the actions that got said company into trouble. The responsible parties are dismissed, new management is installed with specific directions to revise the activities of the company, all that boring stuff.

That is, unless one is simply submissively handing money to one's politically influential masters as expected and required. In that case nothing is done to change the risky behavior, and the responsible parties instead receive multimillion dollar bonuses. Pop quiz; which path was chosen? Tsk, tsk. Do try to pay attention, Lounsie.

Originally Posted by Lounsbury

"Use the money for X, Y or Z" is a fairly worthless and political populistic posturing statement, that merely again undermines your supposed CB critique, which was the point of this (although it does highlight my original point about the primitive knowledge behind 'critiques').

There are 40 years of good data international history for proper financial sector specialists relative to the impact of banking crises, and roughly a century of reasonable financial history on them. There is not any about among non-partisans, non-demogogues that a financial sector collapse is a serious bloody disaster to be avoided for not only its short term but long term losses.

Heh. Data, that's a good one. I got some real world for you. For anyone who is wondering where the feds intend to go from here, I draw your attention to this report. A compendium of all the filthy tricks that various governments have used over the years to evaporate their pesky debt situations down to size. Note the investment restrictions and debasement of the currency, thus robbing folks who are trying to save for the future.

If the US were in the position of going to the IMF for a loan, we would get the same advice as any third world country:
1) Break up our banking oligarchy. Break up any bank that is too big to fail.
2) Enact effective regulations to separate depository banking from speculation. (In our case, repeal the Gramm-Leach-Bliley Act, and reinstate the Glass–Steagall Act.)
3) Mark to market all assets, public and private.
4) Identify bad debt and write it off.
5) Establish a regulated exchange for all derivatives, with sufficient tracking and transparency requirements to allow fair valuation. Restrict trade in derivatives to parties with a legitimate interest in the underlying physical asset. Require all parties to maintain sufficient cash reserves to pay off their bets.
6) Establish a real, workable plan for paying off the remaining debt.
7) Follow the plan or get declared insolvent.

Of course the US won't take it's own medicine. Instead we have done almost exactly the opposite, point by point. Thus ensuring that there will be another banking crisis, and another, and perhaps another after that before it's through.

Originally Posted by Lounsbury

Naive, know-nothing second guessing from people unable to distinguish between first and second order effects and events can ramble on, however the lessons of Credit Anstalt and the wider lessons from subsequent history teach more effectively than populist hand waving...But a banking sector collapse is by its nature a hit on the public. Save the banks or no, you take a hit...The only question, in a financial system collapse is HOW the public is going to bear the cost, the size of the bill and HOW LONG the pain will borne...Transferring the cost to the public is in the end a meaningless statement in a collapse. One pays either via a public restructuring of the banks, or one pays via macro economic collapse. There is ample empirical and comparative evidence that while politically unpopular, the former is less costly than the latter...This entirely explains Bernanke's response, as well as Paulson, contra their politics.

This is true if, and only if, the bad actors are effectively reformed, and regulations are enacted to separate banking from speculation. In the absence of such regulation, bank bailouts are merely a gift of wealth from public to private. Yet you conveniently ignore the elephant in the room and natter on about theory. It is amusing, I'll give you that.

Originally Posted by Lounsbury

Adult systems - non-US have worked perfectly fine with large banks. With proper systems in place.

That says nothing in particular about this subject, although I again note your introduction of fundamentally political, populist - and non technical - critiques. This merely highlights the observation that your framing this as "control of politicians" is utter nonsense, it is merely "human beings are in control and surprise surprise decisions do not match 100% my political views."

Oooh, now we get to the really stinky part. "With proper systems in place". But as we all know, the proper systems are not in place. In fact they have been systematically removed. Using political influence, for the profit of a few politically influential folks. Pesky political fact, that.

No country should allow any company to get 'too big to fail'. Any company that does get that big should be broken up whether or not it's having a financial crisis at the time. Moral hazard, and all. I'm surprised that you don't grasp such a basic risk management concept. Oh yes that's right; ignoring it is more profitable at the moment. Silly me.

Originally Posted by Lounsbury

Leaving aside I believe your figure is incorrect, US central bank buying is driven by a specific CB policy objective, NOT by an inability of US Treasury (a different entity, again) to place its money. There is no sign in the auctions that they have a current lack of buyers.

Bullshit.

Originally Posted by Lounsbury

No, they working the system to avoid a liquidity trap. That few people understand this is not surprising.

I understand exactly what a liquidity trap is. However, there are a lot of ways to apply the money. Simply handing it to the same pack of thieves with no strings attached is not a 'pretty good option'. In fact it's the dumbest thing we could have done, and ensures that we will continue to bite the dust until the banksters are finally reined in. We don't need partial differential equations to understand that, now do we.

Originally Posted by Lounsbury

Yes you did. You also claimed a number of other ideologically driven things. Boring.

Or perhaps I was protesting about having a substantial slab of my life savings carved off, while the swine who intentionally caused the problem walk away with fortunes. They got the gold mine, we got the shaft. Are you sure you're following all this, Lounsie?

Originally Posted by Lounsbury

No, in fact the structured securities may very well, if held to maturity, be worth a rather large fraction. Terrible return for the original buyers, relative to their expectations of double digit returns, but not particularly terrible for a strategic buyer - as in probably net positive, even on a purely financial basis (as the Treasury program was re Fin Sec).

Unless of course one posits that housing in the USA is of zero future value or some such similar scenario.

Do you even know what's in those trauches, Lounsie? Here's a hint for you. I'm sorry that you must bend your patrician eyes to a mere populist source once again. Here, let me wipe those tears away. However if you draw upon your inner grit and persevere, you will find that the vacant houses are moldering away pretty fast. With more than 1 in 10 houses standing vacant nationwide, yes I do propose that they will be worth much, much less than what they are currently valued at on paper. Paper that the public now holds because we're too stupid to put a stop to it.

Originally Posted by Lounsbury

It is very clear to economically literate adults that this was achieved.

Yes, I think is is very clear. We're headed for a brick wall and we will keep colliding with it until we do something different. Very clear indeed.

While we're being clear, I do not dispute that there was a very real need for the feds to take fast action to avoid a financial collapse. However, any financially literate adult who is speaking truthfully cannot deny that the basic problem has not been addressed and the criminals who caused the problem have not been punished.

How much longer do you think the US dollar will be the world's reserve currency, Lounsbury?

[u wan buy dvd?]

As far as I can tell, this is what the whole Lounsbury vs Jaglavak dance battle has to do with my glorious OP:

Originally Posted by Lounsbury

Contra the popular view, among properly trained people there are some clear zones of agreement, but "on the margins" lots of debate.

In other words, nuttin. I dare one of them to remind me why this boocrap does not reside on the margins of consensus.

[Jaglavak]

Originally Posted by u wan buy dvd?

I dare one of them to remind me why this boocrap does not reside on the margins of consensus.

We are discussing the fact that, while conventional economic theory is allright as far as it goes, we can't ignore the fact that our banking industry is broken and is being operated by a criminal oligarchy. If that's too much thread drift for you I'll be happy to take it to another thread.

[u wan buy dvd?]

Originally Posted by Jaglavak

We are discussing the fact that, while conventional economic theory is allright as far as it goes, we can't ignore the fact that our banking industry is broken and is being operated by a criminal oligarchy. If that's too much thread drift for you I'll be happy to take it to another thread.

If this broken banking industry and criminal oligarchy is relevant to conventional economic theory then I'd absolutely LOVE to hear it here. What all of this means or doesn't mean for theory is very much of interest to me.

[Lounsbury]

Originally Posted by Anacanapuna

Then why waste your precious time and obviously gargantuan intellect?

Amusement value, obviously, although I clearly disclaimed a "gargantuan intellectual" - only the minor and fairly pedestrian ability to know when I don't fucking know something and not spout off or make declarations, and rather read and ask questions. Thus my interventions (this kind of posting) in areas other than my real expertise are limited. This apparently escapes you. Your "butthurt" is noted.

You are a twit and everyone can see it.

An interesting opinion.

Originally Posted by u wan buy dvd?

If this broken banking industry and criminal oligarchy is relevant to conventional economic theory then I'd absolutely LOVE to hear it here. What all of this means or doesn't mean for theory is very much of interest to me.

The sole point of real correspondence is the illustration of the problem of naive judgement of expertise, which really holds true as much for economics as for say human genetics, or bio-engineering.

Using the habitual whinging about myself (supra to justify its inclusion), as an illustrative leverage point: people over-estimate (I do not exclude myself) their own ability to judge complex fact sets. And use naive and relative to almost all abstract issues as I understand the science in this area, deeply flawed heuristic models. That's an interesting point of economic research by the way, as this touches on Jaggies dispute with me, but also a real fundamental economic analytical issues (e.g. a not well explored structural problem with real investor decisioning, although the behavioural peeps are doing some interesting work here - in 20 years we may have some rather improved thinking on the granular issues, but we should understand this is thanks to better data and analytics due to IT that even ten years ago was impossible).

This I think has direct relevance to your OP (and rather more useful than people whinging on).

But untangling.... not easy. Not easy.

Originally Posted by Jaglavak

We are discussing the fact that, while conventional economic theory is allright as far as it goes, we can't ignore the fact that our banking industry is broken and is being operated by a criminal oligarchy. If that's too much thread drift for you I'll be happy to take it to another thread.

I will note that the statement above (jaggie's) is neither an economic analytical statement nor an objective statement.

That rather gets to the problem posed by the OP - evaluation of expertise. It is painfully clear from this thread that the subject area (versus say genetic engineering) is a broadly politicised on, and one where at the same time judgement is not easy for the superficially educated.

Originally Posted by Jaglavak

Good show! I like you, Lounsie.

First, I like Lounsie. Has panache, and even on the insulting side (I can see a call to Lousy as in crappy) it has style. Good work. original.

And I like you too, butting heads aggressively is not a reason to have bad blood.

To try to respect the OP and his follow on focus comments, a discussion further should be perhaps in another thread. (Also as an aside to the GIRAFFE et al, I note an annoying and Jaggie (as far as I can tell) specific board issue, his posts don't quote correctly in responses, I would else (if it were not so bloody late) respond to OP relevant points. But since several attempts got the same crappy crazy screwed up quotes...

[Jaglavak]

Originally Posted by Lounsbury

The sole point of real correspondence is the illustration of the problem of naive judgement of expertise, which really holds true as much for economics as for say human genetics, or bio-engineering.

I will agree that there are a lot of marginally aware commentators out there, including many who call themselves economists. I freely admit that I am not an economist. You will note that I avoid debating advanced economic theory with you, because that is over my head at present.

However I am quite familiar with math modelling. My point is, GIGO. If the books are cooked and key bits of reality are ignored, the results will always be garbage no matter how detailed the model. I aim to show at least two fundamental ways that current economic theory ignores reality to a fatal extent. So far we have only discussed one of those ways. Finally, while I do enjoy tweaking your elevated nose, I do not see our views as mutually exclusive.

Originally Posted by Lounsbury

To try to respect the OP and his follow on focus comments, a discussion further should be perhaps in another thread.

That would be fun. I'm out of town in a few hours but I'll be back next week, and I'm looking forward to it.

Originally Posted by Lounsbury

Also as an aside to the GIRAFFE et al, I note an annoying and Jaggie (as far as I can tell) specific board issue, his posts don't quote correctly in responses, I would else (if it were not so bloody late) respond to OP relevant points. But since several attempts got the same crappy crazy screwed up quotes...

I seem to recall that Big G turned off the concatenated quotes feature, to keep threads from getting too long. Yes, it is annoying. I've been cutting and pasting from the Reply window to a text editor so I can see the HTML tags.

[Lounsbury]

I have to fuck off, but Jaggie man, last item just in trying to quote you clean I get totally fucked up results. Okay this needs to go to another forum. Hope to get back to substance, but some fucked up crap to deal with which will fuck the weekend, etc.