I formally began my studies as a Ph.D. student in Economics a little over a month ago. Already I have friends and family phoning me asking me what I think about the recent financial crisis. I give my opinions, share my feelings, and try to help them all as best I can. But the fact is that I don’t know much at all about what is going on, and neither does anyone else.Read the whole thing.
Oh, some people have a handle on bits and pieces of it, but if they really understood it they could have said something about it before it happened. Of course, some did. Economists have rightly predicted 7 of the last 3 recessions. If you constantly sing the same song, you will eventually get a turn on stage.
Perhaps a better question than, “What went wrong,” would be to ask, “what made you think that it wouldn’t?” What do we think creates stability in markets, economic growth, low unemployment, strong credit instruments, and the other mechanisms and institutions which keep the world spinning about us? Are these things dangling from a delicate thread, or welded onto a firm pedestal? Most people never confront themselves with these questions. They just take the world around them for granted, never giving attention to relative precariousness of that world.
Wednesday, October 01, 2008
Economy As Poker
My friend and fellow PhD student, Nathan Snow, shares some great thoughts on the economy: