Harry Clarke On economics, politics & other things

June 6, 2012

Right-wing lunacy at Catallaxy

Filed under: climate change — hc @ 11:27 am

Samuel J at Catallaxy puts principal blame for the global financial crisis on the global introduction of policies to address climate change.

Update: Samuel J corrects a typo in my comment above – I guess that is a some sort of response – and now says that he was only engaging in “musing” and that he never asserted that climate change policies were the only cause of the GFC which of course is rejecting a claim no-one made, certainly not me.

But let me quote:

“….I am coming to the view that the principal catalyst of the GFC – the smoking gun if you like – was the wholesale capitulation by governments and big businesses to the siren song of AGW”.

Sounds fairly definite to me, not a musing.  JQ’s point in the comments is worthy of attention. Do Sinclair Davidson and Judith Sloan endorse these views?   These are (or have been) professors in universities who have studied economics. How do they respond to this idiocy?

67 Comments »

  1. Seems utterly ridiculous to me. I am still relatively new to looking at different blogs…is Catallaxy a hotbed of these sorts of views?

    Comment by IC — June 6, 2012 @ 12:41 pm

  2. I think the term utterly ridiculous is rather mild.

    He is a nutter

    Comment by JB Cairns — June 6, 2012 @ 2:38 pm

  3. This one has even some Catallaxy regular commenters pointing out how silly it is. Not, however, either of the two econ profs on the team, Sinclair Davidson (who engages in some mild snark at the expense of one of the critics) or Judith Sloan (who may perhaps not have read it). I’ll be interested to see if Jim Rose has anything to say, too.

    Comment by John Quiggin — June 6, 2012 @ 3:53 pm

  4. Steve Kates was pushing the absolutely bat**** crazy view that “Dreams of My Father” was written by Bill Ayers recently: http://catallaxyfiles.com/2012/05/26/a-case-study-in-stupid-is-as-stupid-does/

    Isn’t he a tenured economist?

    Comment by Robert in UK — June 6, 2012 @ 6:31 pm

  5. Wow 4 comments here, i guess link whoring at the cat didn’t help.

    (ed. Chris McCaughly, I did not link at Catallaxy).

    Comment by Carpe Jugulum — June 6, 2012 @ 8:59 pm

  6. John, I was planning to post on that thread saying don’t be so silly but I was distracted. I missed my chance – dam

    coase once said that somethings are so silly they used to be only sung. these days they are put into mathematics.

    coase wrote decades before there was blogging.

    Comment by Jim Rose — June 6, 2012 @ 9:27 pm

  7. I didn’t know that about Coase, but Voltaire certainly said: “Anything that is too stupid to be spoken is sung.”

    Comment by Robert (not from UK) — June 6, 2012 @ 9:54 pm

  8. thanks, Coase was standing on the shoulders of a giant.

    HT: Bernard of Chartres

    see http://en.wikipedia.org/wiki/Standing_on_the_shoulders_of_giants

    btw, The quotation was used by Isaac Newton as a backhanded insult directed at Robert Hooke with whom Newton carried on a life long, bitter rivalry. Hooke was a very short man, practically a midget.

    have link on this but not included to avoid the spam filter

    Comment by Jim Rose — June 6, 2012 @ 10:01 pm

  9. I stopped reading at this

    “Rather than being a second-rate pseudo-science were it belongs, climate scientists became more important that physicists, mathematicians, chemists and engineers.”

    How do these jokers maintain the delusion their self-serving and “all-knowing” ignorance is supported by other branches of science and technology? Unfortunately we will live to see the cognitive dissonance that mounting evidence backs the contention that AGW is real.

    Comment by Michael — June 6, 2012 @ 11:50 pm

  10. Robert from the UK you will pleased to know most of Steve Kates ‘articles’ are shown to be highly inaccurate.

    I can recall, from a short memory, alleging there were ten stimili in Japan in the 90s, Harding produced massive spending cuts that lead to a boom ( it was actually Wilson and there were 3 recessions between 1920-27!)and recently he highlighted a Dennis shanahan article which was disasterously wrong about mining capital expendiure.

    He never ever acknowedged any mistakes

    Comment by JB Cairns — June 7, 2012 @ 9:30 am

  11. yikes,
    He is now espousing Estonia as the country we should replicate EXCEPT they experienced a DEPRESSION!

    John both Sinclair and Jim will studiously ignore the article.

    Comment by JB Cairns — June 7, 2012 @ 10:17 am

  12. what article?

    Comment by Jim Rose — June 7, 2012 @ 12:56 pm

  13. Does Samuel J really exist or is he just Sinclair Davidson in drag?

    But on a more serious note, Sinclair recently endorsed Peter Saunders’ bizarre suggestion that gay marriage is a Gramscian “march through the institutions” initiative that is designed to undermine society and destroy capitalism. The Cat has turned into a sad freak show since Jason Soon retired.

    Comment by Mel — June 7, 2012 @ 2:07 pm

  14. You didn’t let me down Jim

    Comment by JB Cairns — June 7, 2012 @ 3:38 pm

  15. I know of no article. blog posts are not articles. have some standards.

    Comment by Jim Rose — June 7, 2012 @ 4:40 pm

  16. I stopped reading at this

    Catallaxy

    Comment by rog — June 7, 2012 @ 5:52 pm

  17. The President of Estonia just threw an amazing hissy fit because Krugman wrote that austerity had failed there. Plays the ethnic victim card, then tries to say its because he went to Columbia

    http://blog.foreignpolicy.com/posts/2012/06/06/president_of_estonia_goes_ballistic_on_paul_krugman

    Comment by John Quiggin — June 7, 2012 @ 8:54 pm

  18. yeah Estonia another Steve Kates success story except as some-one pointed out they had a recession and then a depression.

    They are expected to grow this year a bit less than us except we have exceeded nominal GDP pre GFC, have not unemployment in double digits etal.

    why don’t catallaxians immigrate to the Baltic economic paradise

    Comment by JB Cairns — June 7, 2012 @ 9:08 pm

  19. “yeah Estonia another Steve Kates success story except as some-one pointed out they had a recession and then a depression.”

    Well this is obviously due to the overwhelming left-wing media bias that exists in the US, just ask Steve.

    Comment by conrad — June 8, 2012 @ 1:56 am

  20. The Estonian thing is interesting. All Krugman did was post a plot of GDP showing that Estonia had had a dreadful collapse followed by a partial recovery, but still well below pre-GFC levels. He then pointed out that if this is the best that can be said for ‘Austerity’, it’s not exactly a glowing endorsement. Nothing about wogs, wasteland or Columbia at all.

    I think the reason Krugman had a look at it was because on an interview in the UK a few days back he went head to head with two conservatives who were all in favour of ‘Austerity’. Not long into the interview, it became pretty clear that the conservatives didn’t have a clue what they were talking about. The last comment made by one of the commentators before he drowned in a complete sea of humiliation was to ask why Krugman wasn’t talking about Estonia.

    Now he is and there’s really not a lot to say.

    Comment by PB — June 8, 2012 @ 12:31 pm

  21. I do not read Krugman at all because he was patient number 1 for George W. Bush derangement syndrome.

    I do not recall who patient number 1 for Clinton derangement syndrome was in the 1990s. Too long ago. Too many to diagnose?

    Comment by Jim Rose — June 8, 2012 @ 1:59 pm

  22. Can’t get any more authoritative than being sure a commentator is wrong because you deliberately don’t read his commentary.

    Comment by Sancho — June 8, 2012 @ 2:43 pm

  23. sancho, we all filter information. only 24 hours in the day. people who lost the plot head that list.

    the commentary on this list is suggesting that one or more catallaxians have lost the plot and we should not waste our time reading their rantings. would you be opposed to such a move?

    Comment by Jim Rose — June 8, 2012 @ 3:09 pm

  24. Actually, the commentary is all about discussing what was published on Catallaxy and pointing out how profoundly uninformed and fanciful it is. Not a word about ignoring it or filtering it out.

    Comment by Sancho — June 8, 2012 @ 3:11 pm

  25. you would think people of self-proclaimed superior insight would have better things to do that encourage others to read the profoundly uninformed and fanciful

    Comment by Jim Rose — June 8, 2012 @ 3:59 pm

  26. I’d argue that Krugman is a much better source of information than some anonymous blog commentator. It is sensible to filter out crazies but it is totally wrong to apply that rule here. I am not saying Krugman is always right but he is probably always worth listening to.

    Several reasons to take him seriously are (i) a recent study (link below) showed his predictions were the best of a wide variety of political pundits, (ii) politics aside, he has a stellar reputation as an economist, and (iii) he pretty much preaches mainstream economic thought. Disagree with PK and you are probably disagreeing with the textbook. Further he has received a rare acknowledgment from conservative David Frum over his correct reading of the recession.

    http://www.poynter.org/latest-news/mediawire/130485/claim-krugman-is-top-prognosticator-cal-thomas-is-the-worst/#more-130485
    http://www.businessinsider.com/david-frum-paul-krugman-right-2011-10

    Comment by NickR — June 8, 2012 @ 6:17 pm

  27. the field Krugman was compared with are a rum lot. Includes Nancy Pelosi, Hank Paulson, and Joe Lieberman?! Newt!!

    Hillary Clinton!!! Hillary can’t even tell the truth about been shot at! Did you miss the 2008 presidential primaries?

    I would not trust many on that list with Krugman to tell me the time if they had something in the outcome. I would not take investment advice from any of them. would you?

    as for your remark about mainstream economic thought, can anyone agree what that is given krugman is an old keynesian?

    there are at least seven schools of marcoeconomic throught. all as confident as the pope that they are right and that everyone else is wrong.

    Comment by Jim Rose — June 8, 2012 @ 7:55 pm

  28. Paul is better characterised as new Keynesian rather than old. he is pretty much mainstream, whether you’re taking micro or macro. Macro mainstream is pretty much Keynesian -monetarist with rbc.

    You may not think much of the other guys he was compared with, but you could compare him with other economists and still get the same result.

    Comment by csning — June 9, 2012 @ 2:47 am

  29. thanks csning, Krugman is a neo-keynesian saying that “the intellectual problems with doing macro this way are well known” but “it works beautifully in practice but very badly in theory”

    A paper has investigated who among John Bates Clark Award (JBC); U.S. winners of the Nobel Prize in Economics; and members past and present of the Council of Economic Advisers changes their views of fiscal policy when the party in the White House changes.

    See http://econjwatch.org/articles/when-the-white-house-changes-party-do-economists-change-their-tune-on-budget-deficits

    Six economists changed their tune—Paul Krugman in a significant way, Alan Blinder in a moderate way, and Martin Feldstein, Murray Weidenbaum, Paul Samuelson, and Robert Solow in a minor way—while eleven are found to be fairly consistent.

    1. In the administration of George H.W. Bush, Krugman opposed budget deficits
    2. during the 1992 presidential campaign he changed his tune
    3. Beginning in 2003, the year of the Iraq insurgency, Krugman opposed budget deficits strongly and frequently.
    4. Upon the 2006 Democratic victory in Congress, Krugman reverted to favoring deficits.
    5. He maintained his tune for deficit spending during the 2008 financial crisis:

    To his credit, Krugman noticed and addressed his seeming inconsistency in 2009, repudiating his 2003 position in a blog post.

    He worried about the budget deficit as a structural issue in 2003 but not in 2009. Structural and cyclical deficits provide a valid reason for changing one’s tune on deficits.

    Krugman’s tune change was not of this nature. It was partisan and occurred in the absence of any fiscal emergency in the economy.

    He explicitly supported deficit reduction in the 1990s and early 2000s under Republican administrations, then changed his view once Clinton entered office and the Democrats gained control of Congress in 2006.

    Comment by Jim Rose — June 9, 2012 @ 10:52 am

  30. I did make two posts on this topic over at the Cat:

    1. “schumpeter said the amazing thing about the 1924 tokyo earthquake was it was not blamed on capitalism. perhaps there is a calming lesson in there somewhere”

    2. “in the way out there department, is the sign of the productivity shock from carbon taxes more out there than Bordo having to write ‘Does inequality lead to a financial crisis?’ at http://www.voxeu.org/index.php?q=node/7764

    Which is more out there as a cause of the GFC: a new tax or more inequality?

    Which has better understood transmission mechanisms?

    The supporters of which hypothesis are more smug? which is easier to test?”

    Comment by Jim Rose — June 9, 2012 @ 11:26 am

  31. Jim,

    you have badly portrayed Krugman and deficits.

    He is a traditional Keynesian. He only believes using fiscal policy when monetary policy cannot work i.e a liquidity trap such as now.

    That is complete bunkum about deficits and Clinton. He has only advocated serious deficit spending since the GFC. in fact he argued the opposite of what you are saying for Clinton.
    tighter fiscal policy as that was appropriate then.

    your comment is very callaxian

    Comment by JB Cairns — June 9, 2012 @ 3:12 pm

  32. JC Cairns, Krugman commented on deficits seven times during the Clinton administration. Five of those comments occurred during the 1996 campaign season, in which Krugman primarily criticized Republican policy regarding the budget deficit.

    in a 22 December 2006 column “Democrats and the Deficit” Krugman wrote:

    “the lesson of the last six years is that the Democrats shouldn’t spend political capital trying to bring the deficit down. They should refrain from actions that make the deficit worse…

    The answer, I now think, is to spend the money—while taking great care to ensure that it is spent well, not quandered—and let the deficit be.

    By spending money well, Democrats can both improve Americans’ lives and, more broadly, offer a demonstration of the benefits of good government.

    Deficit reduction, on the other hand, might just end up playing into the hands of the next irresponsible president.

    In the long run, something will have to be done about the deficit. But given the state of our politics, now is not the time.”

    HT: http://www.nytimes.com/2006/12/22/opinion/22krugman.html

    Comment by Jim Rose — June 9, 2012 @ 3:40 pm

  33. In a December 2006 column entitled “Democrats and the Deficit” Krugman wrote:
    “One of the biggest questions is whether the party should return to Rubinomics—the doctrine, associated with former Treasury Secretary Robert Rubin, that placed a very high priority on reducing the budget deficit. The answer, I believe, is no…

    the lesson of the last six years is that the Democrats shouldn’t spend political capital trying to bring the deficit down. They should refrain from actions that make the deficit worse.

    But given a choice between cutting the deficit and spending more on good things like health care reform, they should choose the spending…

    The answer, I now think, is to spend the money — while taking great care to ensure that it is spent well, not squandered — and let the deficit be.

    By spending money well, Democrats can both improve Americans’ lives and, more broadly, offer a demonstration of the benefits of good government.

    Deficit reduction, on the other hand, might just end up playing into the hands of the next irresponsible president.

    In the long run, something will have to be done about the deficit. But given the state of our politics, now is not the time.”

    In a nutshell, Krugman considers democrat deficits are good; republican deficits are bad. He is a party hack who swaps talking points with the election returns.

    Comment by Jim Rose — June 9, 2012 @ 5:11 pm

  34. the WHOLE column is
    Now that the Democrats have regained some power, they have to decide what to do. One of the biggest questions is whether the party should return to Rubinomics – the doctrine, associated with former Treasury Secretary Robert Rubin, that placed a very high priority on reducing the budget deficit.

    The answer, I believe, is no. … Rubinomics made sense in terms of pure economics, [but] it failed to take account of the ugly realities of contemporary American politics. …

    In a saner political environment, the economic logic behind Rubinomics would have been compelling. … Since the 1990s were an era of peace, prosperity and favorable demographics…, it should have been a good time to put the federal budget in the black. And under Mr. Rubin, the huge deficits of the Reagan-Bush years were transformed into an impressive surplus.

    But the realities of American politics ensured that it was all for naught. The second President Bush quickly squandered the surplus on tax cuts that heavily favored the wealthy, then plunged the budget deep into deficit by cutting taxes on dividends and capital gains even as he took the country into a disastrous war. And you can even argue that Mr. Rubin’s surplus was a bad thing, because it greased the rails for Mr. Bush’s irresponsibility.

    As Brad DeLong … recently wrote …: “Rubin and us spearcarriers moved heaven and earth to restore fiscal balance to the American government in order to raise the rate of economic growth. But what we turned out to have done, in the end, was to enable George W. Bush’s right-wing class war: his push for greater after-tax income inequality.”

    My only quibble with Mr. DeLong’s characterization is that this wasn’t just one man’s class war: the whole conservative movement shared Mr. Bush’s squanderlust…

    With the benefit of hindsight, it’s clear that conservatives who claimed to care about deficits when Democrats were in power never meant it. Let’s not forget how Alan Greenspan, … the high priest of fiscal rectitude as long as Bill Clinton was in the White House, became an apologist for tax cuts – even in the face of budget deficits – once a Republican took up residence.

    Now the Democrats are back in control of Congress. … Nancy Pelosi, the incoming House speaker, has promised to restore the “pay-as-you-go” rule that … would basically prevent Congress from passing budgets that increase the deficit.

    I’m for pay-as-you-go. The question, however, is whether to go further. Suppose the Democrats can free up some money by fixing the Medicare drug program, by ending the Iraq war and/or clamping down on war profiteering, or by rolling back some of the Bush tax cuts. Should they use the reclaimed revenue to reduce the deficit, or spend it on other things?

    The answer, I now think, is to spend the money – while taking great care to ensure that it is spent well, not squandered – and let the deficit be. By spending money well, Democrats can both improve Americans’ lives and, more broadly, offer a demonstration of the benefits of good government. Deficit reduction, on the other hand, might just end up playing into the hands of the next irresponsible president.

    In the long run, something will have to be done about the deficit. But given the state of our politics, now is not the time.

    I will add Brad De Long’s comments as they are pertinent

    Brad DeLong updates his post on Krugman’s commentary with:

    UPDATE: Most commentators–whether by accident or by design–have missed the significance of this passage in Krugman’s op-ed: “Nancy Pelosi, the incoming House speaker, has promised to restore the “pay-as-you-go” rule that the Republicans tossed aside in the Bush years. This rule would basically prevent Congress from passing budgets that increase the deficit. I’m for pay-as-you-go. The question, however, is whether to go further…”

    Restoring pay-as-you-go means that the Bush tax cuts expire at the end of this decade–unless, that is, som coalition finds sufficient spending reductions relative to the current baseline spending path to pay for an extension of the tax cuts.

    The embrace of pay-as-you-go orders up a $300 billion rise in taxes at the end of this decade. That’s a significant amount of deficit reduction all by itself, and a very significant change from Bush administration idiocy.

    not a good look Jim not at all.

    Comment by JB Cairns — June 9, 2012 @ 6:11 pm

  35. Krugman considers democrat deficits are good – republican deficits bad. read the op-ed.

    he also learnt a politic trick too. leave your successors with large budget deficts to tame. They will have done that work by the time you side is about to be elected again.

    when the left is coming into power, the right should run large deficits to tie their hands.

    there is the old Neil Wallace-Thomas Sargent “game of chicken” concept may offer some clues.

    In some of Sargent’s writings, he suggested that the Reagan tax cut forces were hoping to make the tax cuts permanent by coercing the democractic Congress to slash spending.

    Comment by Jim Rose — June 9, 2012 @ 6:31 pm

  36. that is crap Jim,

    I will simply leave that piece for people to discern for themselves.

    yeah the right is good at that Reagan, Bush left wonderful surpluses after their terms expired!!

    Comment by JB Cairns — June 9, 2012 @ 6:38 pm

  37. JB, did Pilosi restore pay-as-you-go? do you trust Pilosi in the “the ugly realities of contemporary American politics”?

    Is pay-as-you-go sound public finance? Isn’t the pay-as-you-go Social Security a Ponzi scheme?

    does pay-as-you-go allow for cyclical deficits? Pilosi proposed a “rule (that) would basically prevent Congress from passing budgets that increase the deficit”. Does that rule out a cyclical deficit?

    Comment by Jim Rose — June 9, 2012 @ 7:49 pm

  38. for one better see HOW MOVIES CREATED THE FINANCIAL CRISIS by Larry E. Ribstein

    Abstract:
    “Narrative makes sense out of reality and can forcefully persuade listeners to a particular point of view.

    Artists in general have a narrative of business which springs from their belief that at least some aspects of busi-ness are antithetical to art. Filmmakers add to this a resentment of the constraints capital places on their art.

    Film is particularly persuasive because of its vivid images and because of the consistency of filmmakers’ anti-capitalist perspective on business.

    Filmmakers’ negative portrayal of capitalists has helped to prepare the public to believe that capitalists – and not government, economic cycles, greedy people or business generally – caused the financial crisis.

    This will help the public accept a regulatory agenda built on this premise, specifically including the regulation of hedge funds.”

    Comment by Jim Rose — June 11, 2012 @ 8:48 am

  39. This is what happens when a Catallaxy-style libertarian goes into the witness box:

    “[28] The respondent is aged 77 and appears to be a successful businessman but as a person and a witness he was difficult, demanding, unrealistic, rude, unco-operative, self centred, uncompromising, rigid, untruthful, selective in what he said he could and could not remember, selfish, mean, grossly irresponsible, uncaring for the rights of others and dismissive of the case against him despite compelling evidence to the contrary. He couldn’t care less that activities he allows to be conducted on his land have caused and are causing significant environmental nuisance problems for others in the near neighbourhood. He is dismissive of any regulatory attempts to limit or control his activities and is unwilling to consider any suggestion that he may have some responsibility for what is happening.”

    - Department of Environment & Resource Management v Clark [2011] QPEC 20

    Comment by Alphonse — June 12, 2012 @ 11:44 am

  40. Jim, the question “does inequality lead to a financial crisis”, or more precisely “does INCREASING inequality reduce macroeconomic stability?” may ultimately be answered “yes” or “no”, but there is no way it is as “out there” as the Catallaxian musings. There is a very respectable body of research on the question – including at the OECD Economic Division, hardly a hotbed of socialism.

    Comment by derrida derider — June 12, 2012 @ 3:13 pm

  41. thanks derrida derider, blow is cross-post from 10.40 am today:
    see http://economistsview.typepad.com/economistsview/2012/06/inequality-and-the-crisis.html that links to Inequality, the crash and the crisis: Part 1 “The defining issue of our times” at OECDinsights

    mark toma is on the money:

    “I’ll be interested to see the evidence in part 2.

    There does seem to be an association between inequality and crises, but causality has been much harder to establish.

    It’s easy to think of stories where this could happen, e.g. inequality leads to political power which spurs deregulation and causes a crisis.

    But it’s just as easy to think of stories where a third factor causes both inequality and instability, and the evidence has not been sharp enough to allow us to choose one particular story over the others.”

    Comment by Jim Rose — June 12, 2012 @ 4:02 pm

  42. A common Socratic question is to ask that the issue be expressed in another way.

    An example is did the attempts earlier in the 2000s to reduce inequality increase macroeconomic instability?

    There is a rich history of how regulations has destabilised the business cycle.

    An example of such is the U.S. state and federal laws against branch banking contributed to the thousands of bank failures in the great depression. These laws benefited small banks and their local constituencies.

    Deposit insurance is another example of regulation that benefited small banks and their local constituencies but was opposed by the larger, more diversified big banks.

    In the Kareken and Wallace model of banking, deposit insurance and lender-of-last-resorts are purely a bad because moral hazard encourages risk taking unless there is regulation or proper surveillance and pricing of the insurance.

    The deviations from the Taylor rule in the earlier 2000s in the USA and EU promoted home ownership among marginal borrowers and drove up the home prices for existing middle home owners.

    Sub-prime credit varies inversely with home prices. The home price boom contributed both to unusually robust sub-prime credit performance, and threw the sub-prime underwriting risk management programmes off track. This produced loose underwriting policies that became much too lax as the housing boom progressed.

    The unusually low interest rate policy certainly was a factor in the housing boom.

    For a long period, there was considerable pressure by Congress on Fannie and Freddie Mae to support the objective of low-cost housing. The only way to satisfy that was for Fannie and Freddie to lower their standards.

    There is easier to say that attempts to reduce inequality increase macroeconomic stability, too big to fail and Kareken and Wallace moral hazard in banking. most of the case already has been made by many writers on the role of sub-prime credit and moral hazard in the global financial crisis.

    Government actions and interventions caused, prolonged, and worsened the financial crisis. Many of these actions were driven by concerns with inequality.

    Comment by Jim Rose — June 13, 2012 @ 11:44 am

  43. I will say this here but Sinclair Davidson is such a liar.
    He claims I derails threads yet it was not I that brought up any of the topics he said.

    I merely respond to people’s comments.

    Nor has he at any time been able to show any quote I have made of people are wrong yet I can do this at infinitum of people at Catallaxy.

    the real reason he banned me is that I asked a simple question of him about Treasury modelling and he couldn’t answer it.

    mind you he doesn’t even understand what the word predecessor means.

    that says it all really.

    By the way Jim it was only when Sub-prime went for a large fall that congress wanted Fannie and Freddie to pick up sub-prime loans.

    If they really did do this why were their delinquency rates below the market average. Their problem was liquidity.

    Comment by JB Cairns — June 13, 2012 @ 10:14 pm

  44. JB, if delinquency rates are below the market average, why by August 2008 did the shares of Fannie Mae and Freddie Mac fall more than 90% from their one-year prior levels?

    in 2008, Fannie Mae and Freddie Mac owned or guaranteed about half of the U.S.’s $12 trillion mortgage market

    why are Fannie Mae and Freddie Mac under a federal conservatorship if sub-prime delinquency rates are below the market average?

    if their delinquency rates below the market average, add some to your retirement savings portfolio because there is an arbitrage opportunity for the taking. buy, buy, buy!

    others on the left would also believe that French bonds are now a safer bet, as would be Greek bonds if a left-wing government is elected on Saturday

    Comment by Jim Rose — June 14, 2012 @ 11:53 am

  45. they took on far too much debt.

    read this.

    Comment by JB Cairns — June 14, 2012 @ 1:40 pm

  46. didn’t work

    read <a href= "http://www.scribd.com/doc/68098581/CRA-GSE-201136pap&quot;.this.

    Comment by JB Cairns — June 14, 2012 @ 1:41 pm

  47. yipes
    read this

    Comment by JB Cairns — June 14, 2012 @ 1:42 pm

  48. JB, If you can’t find one confounding study on any topic, the econometricians are just not trying hard enough.

    The first two readings in my honours year methodology of econometrics course were the Leamer’s Con out of econometrics from 1983 and Hendry’s equally recent published Econometrics: alchemy or science?

    These two now classics blew me away and stayed at the front of my mind to this day.

    My lecturer suggested that one guard against data mining was to appendix all regressions run. No one does that.

    In the 1980s, data mining and publications bias were so strong and statistical inferences were so fragile that that Ed Leamer’s 1983 Let’s take the con out of econometrics paper made up and coming applied economists despair for their professional field and for their careers.

    Ed Leamer still doubts the progress towards techniques that separate sturdy from fragile inferences. Economists by and large still don’t want to hear that they cannot make major conclusions from the data sets.

    Hendry’s developed a massive bank of tests in PCgive, but econometric diagnostics reported in many papers the 2000s are little more informative to those in the 1970s.

    Saw a paper the other day arguing that data mining together with publication bias increases false positives in published articles to about 40% or more.

    Comment by Jim Rose — June 14, 2012 @ 1:58 pm

  49. I remember those two papers well.

    Comment by JB Cairns — June 14, 2012 @ 4:09 pm

  50. “I invite the reader to try and identify a single instance in which a “deep structural parameter” has been estimated in a way that has affected the profession’s beliefs about the nature of preferences or production technologies or to identify a meaningful hypothesis about economic behavior that has fallen into disrepute because of a formal statistical test.”

    The Scientific Illusion in Empirical Macroeconomics, Lawrence H. Summers, Scandinavian Journal of Economics, Vol. 93, No. 2, Proceedings of a Conference on New Approaches to Empirical Macroeconomics. (Jun., 1991), pp. 129-148

    as Stigler said, it takes a theory to beat a theory. his nobel lecture is well worth reading on this topic.

    Comment by Jim Rose — June 14, 2012 @ 4:53 pm

  51. I just looked at the Treasury modelling cited by Stagflation Davidson and he is comparing a rise in constant prices in the modeling with a rise in current prices which was just announced.

    either he doesn’t understand elementary statistics or he is being deliberately misleading again to his statistically challenged audience.

    Comment by JB Cairns — June 15, 2012 @ 4:01 pm

  52. Got banned from Catallaxy, JB? But Sinclair Davidson and the IPA are strident promoters of free speech and critics of censorship. That’s not possible.

    http://blogs.crikey.com.au/purepoison/2011/12/06/cut-paste-trophy-december-2010/all-comments/#comment-72524
    http://blogs.crikey.com.au/purepoison/2011/12/06/cut-paste-trophy-december-2010/all-comments/#comment-72618

    Comment by Sancho — June 15, 2012 @ 6:38 pm

  53. Sancho, do you invite ill-mannered people into your house?

    Comment by Jim Rose — June 15, 2012 @ 9:55 pm

  54. tell me Jim,

    do you think it is correct to compare a rise in current prices against a model prediction based on constant prices?

    Comment by JB Cairns — June 16, 2012 @ 10:54 am

  55. JB, I am not your court of appeal or free mediator on disputes you have with others. make your case on your own two feet.

    Comment by Jim Rose — June 16, 2012 @ 12:26 pm

  56. ah Jim you squib it again.

    It isn’t a dispute either.

    Comment by JB Cairns — June 16, 2012 @ 1:14 pm

  57. I do not know what your latest snipe hunt with sinclair is about, nor am I interested.

    you focus on details because the main threads of debates are against you, which you do not want to debate.

    that main thread is the power price rises will rightly or wrongly be blamed by expressive voters on the carbon tax.

    any plans to counter that?

    Comment by Jim Rose — June 16, 2012 @ 1:27 pm

  58. My latest snipe is that other led the commenting astray. I didn’t.

    I even gave the thread’s name so it is very easy to find ou who is correct and who is lying.

    As to the modeling exercise. It is pretty easy Jim.
    At present Sinclair is comparing a rise in current prices with the modelling rise in 1010 constant prices.

    Is this a correct thing to do. not a hard question. any person who has completed elementary statistics can comment.

    you want to avoid commenting.

    Comment by JB Cairns — June 16, 2012 @ 2:18 pm

  59. JB, I am not your court of appeal. make your case on your own two feet to whomever made the error.

    Comment by Jim Rose — June 16, 2012 @ 3:59 pm

  60. you are being called for an opinion and you are squibbing it.

    In essence because you are squibbing it we know your answer just like in the Lindzen case.

    Comment by JB Cairns — June 16, 2012 @ 5:09 pm

  61. I do not know what your latest snipe hunt with sinclair is about, nor am I interested.

    the main thread is the power price rises will rightly or wrongly be blamed by expressive voters on the carbon tax.

    any plans to counter that or will you squib it?

    Comment by Jim Rose — June 16, 2012 @ 6:23 pm

  62. Jim’s function is to defend Catallaxy’s reputation..

    Comment by rog — June 16, 2012 @ 6:59 pm

  63. I thought so,

    Jim squibs it again.
    He knows he cannot defend this shameless use of bad statistics so he stays mum.

    I should have realised this from when he could never bring himself to criticise Lindzen.

    Comment by JB Cairns — June 16, 2012 @ 7:25 pm

  64. I do not know what your latest snipe hunt with Sinclair is about, nor am I interested. take your concerns up with him, if you dare.

    Comment by Jim Rose — June 16, 2012 @ 7:47 pm

  65. Homer & Jim.

    How about ending this nonsense? No more comments on this thread please.

    Comment by hc — June 16, 2012 @ 8:16 pm

  66. Harry,

    if a person said ‘so the carbon price has used up 8.9% of the 10%’ but the 8.9% relates to current prices but the 10% relates to constant prices would you say the person understand statistics or simply the person is being wilfully misleading?

    Comment by JB Cairns — June 17, 2012 @ 4:44 pm

  67. Just musing about the meaning of “catalyst”

    Comment by G Morton — August 14, 2012 @ 12:18 am

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