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by woodandsteel
3276 days ago
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>it was caused by MBAs who approved mortgages that should have never been approved in the first place. But the point is the economists should have seen that was happening, so we could think about the government stopping it, or at least to put the public on guard. Instead the economics profession, with a few exceptions like Dean
Baker, told the world that things were going just fine. I mean, what is the point of even having an economics profession if it can't help us make intelligent decisions on economic matters? |
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A large number of economists (in academia, public institutions, and private finance firms), all across the ideological spectrum (Austrians, Keynesians, and every other flavor) did see it happening.
People didn't respond to then, probably because the existence of a bubble isn't a problem, as long as you can delude yourself to thinking you'll be able to time the market so you won't be holding the ball when it pops.
> Instead the economics profession, with a few exceptions like Dean Baker, told the world that things were going just fine.
Baker was far from the only prominent economist pointing to a bubble. In fact, economists were warning about the housing bubble and the fact that it would have to burst before the first dot-com bubble burst (or even expanded) back as far as the mid-1990s. That may actually be the real problem: the warnings had been around for so long no one took them seriously any more; as controversial as identifying a bubble can be, it's a lot easier to identify it than time when it will pop ,and the longer it is pointed to without popping, the more likely people are to convince themselves it's just a permanent feature of the market and not a bubble that will pop.