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This is from the economist (a critique of krugman’s “conscience of a liberal”) I would LUV for a podcast (or series of them) that discusses inequality/mobility vs growth or whatever…by far one of the most challenging economic questions. Iceland (other non-stimulus using countries) is great evidence for stimulus effectiveness…not to mention the work of jan hatzius at goldman sachs (and all the other professional, private market economists).
Zombie spend money and trash it skin#
The problem was/is the incentives for generating the securities (ie the “no skin in the game” problem for originators) compounded with the TBTF guarantee….and lack of due diligence from end investors.
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I notice the complete absence of fannie and Freddie as major culprits in the crisis…this makes a lot of sense bc only financial entities w/ the “too big too fail” (TBTF) structure took the risks that ruined them (and the system). The only qualifier is that the entire system was fragile, so looking back it’s only a question of: if LEH was saved, then who would’ve been next? (ie which jenga piece would’ve caused the entire, shabby tower to collapse?) Luv u russ, but ur Hyper skepticism on LEH failure is…well “hyper”…all traders will tell u LEH changed everything- so will historical data on market and economic activity (market: volatility, volume, credit spreads, etc / economic: manufacture output, employment, consumer activity, etc) that LEH precipitated the crisis. Ur podcast is part of what makes monday my fave day…thanks a ton!