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Let's see, official recessions are 1907, 1918, 1929, 1953, 1957, 1960, 1973, 1980, 1990, 2001, and 2007. The evidence looks pretty weak, although it's hard to eyeball. It would be nice to throw up a simple regression and get objective. It's interesting that banker pay continued to rise well into the Great Depression. I'm guessing that this was due to all the demand for financial talent to work the bankruptcies and restructurings, and maybe businesses needed more folks to comply with exponentially expanding government regulations. On the other hand, maybe LOW banker salary correlates with depressions, since there are fewer deals to do. Thus, high banker salaries would be A Good Thing for a country, since it signals high economic growth, and low banker salaries would be A Bad Thing. The more that I look at it, the worse this "excess wage" statistic looks as a predictor. Sure, it grew during the housing bubble, but this is the millionth statistic I've been shown that shot up like a rocket during that period. Lastly, what the hell is "excess wage"? That's surely the low-hanging hole in this analysis. They didn't teach me about that in Macroeconomics. It's hard to look at this graph and make generalizations when you don't know what the hell this new, undefined quantity is and how they calculated it. I guess someone could say, "well go look it up on your own". But then I could say, "Your blog presents pseudo-information that is not useful, and is frankly misleading". Of course, the lesson we are supposed to take home is "
Greed without Governance, allowed to build over N years, equals depression, and its absolutely predictable - now isn't that depressing....". Gee, I wonder if the blog owner came up with that after being exposed to this information, or before. And I can't think of any "governance" that would have stopped the massive capital flows going into the housing sector that is even close to a good idea for the long term economy. But that is another issue altogether. On the bright side, reading inane writing in support of preconceived ideas like this inspires me to do better in my own work. |