It is a fact that the decision to use faulty models was an economic
and political choice, because it benefited the economists along with
those who hired them. For example, the elites get wealthy during booms
and they get wealthy during busts. Therefore, the boom-and-bust cycle
benefits them enormously, as they can trade both ways.
Specifically, it seems the “winning model” today is for the big boys to make bucket loads of money during the booms using fraudulent schemes and knowing that many borrowers will default. Then, during the bust, they know the government will bail them out, and they go about buying up competitors for cheap and consolidating power. They may also bet against the same products they are selling during the boom, knowing that they'll make a killing when it busts.
It is not like economists weren't warning about booms and busts. Nobel prize winner Hayek and others were, but were ignored because it was "inconvenient" to discuss this "impolite" issue. ................... (more)
Specifically, it seems the “winning model” today is for the big boys to make bucket loads of money during the booms using fraudulent schemes and knowing that many borrowers will default. Then, during the bust, they know the government will bail them out, and they go about buying up competitors for cheap and consolidating power. They may also bet against the same products they are selling during the boom, knowing that they'll make a killing when it busts.
It is not like economists weren't warning about booms and busts. Nobel prize winner Hayek and others were, but were ignored because it was "inconvenient" to discuss this "impolite" issue. ................... (more)
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