tag:blogger.com,1999:blog-5880610.post1260248919614582406..comments2024-01-13T18:57:18.243-05:00Comments on Information Processing: Incentives and bubble logicSteve Hsuhttp://www.blogger.com/profile/02428333897272913660noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-5880610.post-52854999664296068592008-11-01T23:51:00.000-04:002008-11-01T23:51:00.000-04:00More great coverage from the NPR/TAL team of Alex ...More great coverage from the NPR/TAL team of Alex Blumberg and Adam Davidson:<BR/><BR/><A HREF="http://www.npr.org/templates/story/story.php?storyId=96333239" REL="nofollow">How Credit Default Swaps Spread Financial Rot</A><BR/><BR/><A HREF="http://www.npr.org/templates/story/story.php?storyId=96395271" REL="nofollow">Unregulated Credit Default Swaps Led to Weakness</A><BR/><BR/>From a comment onAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-17794674379283429052008-10-22T16:16:00.000-04:002008-10-22T16:16:00.000-04:00All this talk of stupid bankers (and humanity in g...All this talk of stupid bankers (and humanity in general) makes <A HREF="http://www.gecdsb.on.ca/d&g/astro/music/Galaxy_Song.html" REL="nofollow">Eric Idle's Galaxy Song</A> seem rather apropos.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-5894452327871030032008-10-22T13:48:00.000-04:002008-10-22T13:48:00.000-04:00Davies points out some macroeconomic drivers behin...Davies points out some macroeconomic drivers behind the bubble. I agree that a liquidity glut, savings glut, etc. were the macroscopic drivers. <BR/><BR/>He seems to think the housing price bubble was rational. On that I disagree -- he wants to use the rental yield vs bond yield metric for valuing homes, which I think is nuts. We had record low rates due to a *temporary* liquidity glut.<BR/><BR/>Steve Hsuhttps://www.blogger.com/profile/02428333897272913660noreply@blogger.comtag:blogger.com,1999:blog-5880610.post-45837908123168488812008-10-22T12:48:00.000-04:002008-10-22T12:48:00.000-04:00What do you think of Daniel Davies' claim that it'...What do you think of Daniel Davies' claim that it's not at all the banks' fault, but rather solely the central bank's?<BR/><BR/><A HREF="http://crookedtimber.org/2008/10/17/those-stupid-bankers-and-their-stupid-stupidity/" REL="nofollow">http://crookedtimber.org/2008/10/17/those-stupid-bankers-and-their-stupid-stupidity/</A>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-26379616339116530622008-10-21T11:26:00.000-04:002008-10-21T11:26:00.000-04:00Roger,The discussion does not miss the point. The ...Roger,<BR/><BR/>The discussion does <EM>not</EM> miss the point. The post was about the internal logic of a bubble, which makes a mockery of Anna Schwartz's remark: "Everything works much better when wrong decisions are punished and good decisions make you rich."<BR/><BR/>Certainly the upper echelons of these companies looted them and walked away with the proceeds. That was the logic of the Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-14817830848855721442008-10-20T23:54:00.000-04:002008-10-20T23:54:00.000-04:00This discussion misses the point. All the example...This discussion misses the point. All the examples are of people who had personal incentives for short-term profit but no effect on whole institutions. The borrower, in particular, had reason to think that price appreciation would bail him out. The middlemen had the positive incentive of making money that some other middleman would have made if they had been straight arrows.<BR/><BR/>But the Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-15083837655697154952008-10-20T20:33:00.000-04:002008-10-20T20:33:00.000-04:00PS (2): I meant to include a link to that review (...PS (2): I meant to include a link to that <A HREF="http://www.theatreview.org.nz/reviews/review.php?id=1482" REL="nofollow">review</A> (plus reader comments) in my previous comment on this post.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-39912440968593389032008-10-20T20:26:00.000-04:002008-10-20T20:26:00.000-04:00PS: A bit more on Brecht, from a comment on a revi...PS: A bit more on Brecht, from a comment on a review of a performance of <EM>The Threepenny Opera</EM>:<BR/><BR/><EM>Nik Smythe ends his review with “It's arguable Brecht was always aiming for a non-plussed response to his work, perhaps to illustrate the fatuousness of the convention of theatre itself.” <BR/><BR/>There is a growing body of evidence to suggest that Brecht preferred a ‘non-plussed Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5880610.post-36796882793746523402008-10-20T20:01:00.000-04:002008-10-20T20:01:00.000-04:00Anna Schwartz: "Everything works much better when ...Anna Schwartz: <STRONG>"Everything works much better when wrong decisions are punished and good decisions make you rich."</STRONG><BR/><BR/>From an account of a <A HREF="http://online.wsj.com/article/SB122428279231046053.html" REL="nofollow">recent interview</A> in the Wall Street Journal, via <A HREF="http://delong.typepad.com/sdj/2008/10/anna-schwartz-w.html" REL="nofollow">Brad DeLong</A>.<BR/Anonymousnoreply@blogger.com