It's a valid question and I find that I am, willy-nilly, asking this question of myself a lot, esp recently. However, I am not the one making a categorical statement that it all would have been fine. Maybe, maybe not. My point is all about risk management. It's like a hypothetical situation where you've got a ginormous position on that might, with a small(ish), but non-zero probability, wipe you and your entire shop out. Suppose you're the risk manager and also have significant personal capital at stake in the firm. What would you do in such a situation? Sorry, more questions. Why is it that anyone who disagrees with you always has to be a "shill"? As to your links, how is it that you think you can somehow reinforce your statements with opinions of a couple of journalists/commentators? Are these two dudes, Kevin Phillips and David Stockman, supposed to be authorities on the issues they're talking about?
We don't know, that's the whole point... But many on here who blame the Fed for all of their problems claim that they do in fact KNOW we would have been better off if nothing was done. Hence their unfounded criticism.
I know that because I have actually looked at the academic literature on the subject. Do you want references to papers that discuss these issues? I am not saying the BPP numbers aren't real. I am asking why I should weigh them more than the official CPI measures produced by the BLS. I don't trust the govt, but in my personal experience I have no reason to conclude that they're distorting reality somehow. I have already said why I don't like Shadow Stats. I'll reiterate: if John Williams were serious and not just out there for publicity/monetary gain, he would respond to his critics and engage in a dialogue with economists that have approached him. As to your last question, I believe I responded in a post above.
Ah, the ole just think how bad it would have been if we did nothing line. Your have been reading your response manuel from the central bank i see.
It could be worse, right Kass? http://www.thefiscaltimes.com/Artic...ll-for-the-57th-Month.aspx?source=patrick.net
I'm still going to disagree here. Business is business, wether the moral compass is thrown out the window or not, you CAN blame them for pulling a fast one on the public and to that degree I feel the same way, no one cared especially the guys that were making money off the disgusting mortgages knowing full well people had no business buying them. That said, It wasn't illegal, they were taking advantage of a silly system and the general ignorance and stupidity of the country. I don't like it either but that doesn't mean I'm going to blame them because its a two way street. The people should have known it wasn't possible for them to pay that off. Everyone's greed played a role. I don't think sub-prime should have been created in the first place, but it was and that story is done. As far as the banks issuing the mortgages, the reason why they didn't care after a while was because one, some people truly did believe housing prices would not fall. Let's not get into that right now. And two, these firms would take those mortgages, basket them up and sell them off to other institutions and make their money back immediately and put someone else holding the bag. So in essence, you're lending $1,000 to your crackhead cousin, and then you're going out to 50 people you know and asking them each for $20 knowing they'll give it to you and in the end you get your money back, maybe even some extra, and you forget you ever lent your cousin the money and move on with your life.
The standard line from pro central bank leeches. "just think how bad it would have been if they did nothing" To every action there is always an equal and opposite reaction, it's just a matter of time.