Bill Bonner takes apart various idiots and idiocies. From Bonner at acting-man.com:
There must be some dark corner of Hell warming up for modern, mainstream economists. They helped bring on the worst bubble ever… with their theories of efficient markets and modern portfolio management. They failed to see it for what it was. Then, when trouble came, they made it worse. But instead of atoning in a dank cell, these same economists strut onto the stage to congratulate themselves.
The scalawag himself. Keynes provided governments with the “scientific” fig leaf fore interventionism that economists had previously denied them. The cost in terms of economic and technological progress is incalculable. Photo via MIT Press
“The Greatest Depression that could so easily have happened in 2009 but did not is the tribute that the world owes to economics”, wrote Arvind Subramanian in The Financial Times.
Arvind Subramanian: congratulating mainstream economists (a sub-set of society that includes him) for failing to foresee a mess their own advice has produced. The chutzpa of this guy is really admirable. He is of course correct that it is difficult to make forecasts (in fact, economics as a science has nothing to do with making predictions), but anyone who didn’t see the 2008 crisis coming had to be blind as a fricking bat. Even housewives could see it coming, but a very long list of prominent professional economists and “policymakers” evidently couldn’t. Fine, but these are the same people that insist that they know what to do about it. That is decidedly not so. They have now produced what will turn out to be an even greater mess. Photo credit: Bijoy Ghosh
We were lost from the get-go, trying to interpret the sentence. It is as tangled and puerile as the staggering conceit behind it. Then, Mr. Subramanian sets up the stage props:
“In 2008, as the global financial crisis unfolded, the reputation of economics as a discipline and economists as useful policy practitioners seemed to be irredeemably sunk. Queen Elizabeth captured the mood when she asked pointedly why no one (in particular economists) had spotted the crisis coming. And there is no doubt that, notwithstanding the few Cassandras who had correctly prophesied gloom and doom, the profession had failed colossally…”
He then brushes off the Queen’s very sensible question:
“But crises will always happen, and even if there is a depressing periodicity to them as Professors Reinhart and Rogoff have catalogued, their timing, form, and provenance will elude prognostication.”
The Queen, here seen shortly after being apprised of Mr. Subramanian’s excuse in the FT
Photo credit: Mark Stewart
Of course, the record doesn’t show that the crisis eluded prognostication; any dope could have seen it coming. But the prognosticators who had contributed so mightily to the crisis had blinded themselves with their own claptrap. Still, Mr. Subramanian figures that they “vindicated” the profession in the way they responded to the crisis.
“On monetary policy, Bernanke was true to the word he gave to Milton Friedman on the occasion of his 90th birthday: ‘Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.’
Bernanke, the pre-eminent student of the Great Depression, found conventional and some very unconventional ways of not doing ‘it’ again. At the peak of his interventions, the U.S. Fed came to resemble the Soviet Gosbank, more a micro-allocator of credit than a steward of macroeconomic policy.”
It probably wasn’t the point he intended to make, but the Fed does resemble the Soviet era Gosbank – manipulating, meddling, and micro-managing the economy toward destruction.
To continue reading: 100 Years of Mismanagement
