How many examples can we cite when government investigates itself that the outcome is “the answer is to make government bigger and stronger”? This story is, sadly, another on that list. Deflect, obfuscate, self-congratulate, and recommend more bloat, is the wretched formula.
The rigged nature of the Commission and its report are evident to anyone who doesn't have a dog in the race. Why, then, do insiders bother to enact elaborate "investigation theater"?
Perhaps they have a peculiar need to persuade themselves? Or perhaps they want to build a "scholarly" moat of sorts? Or perhaps they are merely cogs in the wheels of the machinery of legitimacy? Thoughts?
I would not be surprised if somewhere in the Times or the Post, there will be an article summarizing the article and basically declaring it the final word on 2008. "Educated opinion" will then know what to think about causes, what to think about proposed solutions, and what to dismiss as uninformed or wrong-headed.
"The rigged nature of the Commission and its report are evident to anyone who doesn't have a dog in the race."
Most people don't know enough details to know it was rigged, or even to know it was wrong. At most they might see a news report along the lines of the journal paper.
About 12 years ago, I attended a different sort of conference at Dimensional Fund Advisors of which one of the co-founders was Gene Fama, who propounded the efficient markets hypothesis. His oft-times co-author, Ken French (Dartmouth B-School), gave a lecture pointing to several factors that caused the GFC, esp. surrounding mortgages. In summary, these factors were over-leverage (a common foible on Wall Street), financing long assets with short-term liabilities (a common foible among banks and other intermediaries), the daisy chain of paper underlying mortgages, which diluted investors' skin in the game, and errors by the rating agencies. The cleanest solution to all of these mistakes wouldn't be more and different rules but rather, and more simply, higher capital requirements, and perhaps more liability imposed on the rating agencies. Then all market players would have been more careful. Clearly, it didn't help that Congress insisted on Fannie and Freddie lending too much to sub-prime borrowers, although that was not a factor that French mentioned.
From WSJ 3/13/23: "Mr. Frank once famously said he wanted to “roll the dice” to ramp up lending on Fannie Mae and Freddie Mac before they failed". With regulators like these, who needs heads-we-win-tails-you-lose bankers? Seriously, it takes government to do so much harm to so many.
Arnold, don't assume that people who push back against official narratives are necessarily low on the "agreeableness" factor of the big five personality traits (openness, conscientiousness, extraversion, agreeableness, and emotional stability). Yes, too much agreeableness can be associated with a failure to push back, but there are some who are above average on that factor who nevertheless do. Perhaps because they are also high on conscientiousness.
"If you let government control the narrative, it will always say that problems come from the private sector, and the answer is to make government bigger and stronger." Yup.
I'm currently reading a little book called Leadershift, by Orrin Woodward and Oliver DeMille. They categorize ppl as credentialists, bureaucrats, entrepreneurs and builders. I see echoes here.
Is there a reason you don't include a link to your paper at Mercatus?
https://www.mercatus.org/research/research-papers/not-what-they-had-mind-history-policies-produced-financial-crisis-2008
When mentioning Angelides, a proper Buchananist would discuss his role at CALPERS.... https://www.city-journal.org/article/the-pension-fund-that-ate-california#:~:text=CalPERS%20also%20banned%20investments%20in,markets%20index%20by%202.6%20percent.
How many examples can we cite when government investigates itself that the outcome is “the answer is to make government bigger and stronger”? This story is, sadly, another on that list. Deflect, obfuscate, self-congratulate, and recommend more bloat, is the wretched formula.
Depressing.
A puzzle:
The rigged nature of the Commission and its report are evident to anyone who doesn't have a dog in the race. Why, then, do insiders bother to enact elaborate "investigation theater"?
Perhaps they have a peculiar need to persuade themselves? Or perhaps they want to build a "scholarly" moat of sorts? Or perhaps they are merely cogs in the wheels of the machinery of legitimacy? Thoughts?
I would not be surprised if somewhere in the Times or the Post, there will be an article summarizing the article and basically declaring it the final word on 2008. "Educated opinion" will then know what to think about causes, what to think about proposed solutions, and what to dismiss as uninformed or wrong-headed.
"The rigged nature of the Commission and its report are evident to anyone who doesn't have a dog in the race."
Most people don't know enough details to know it was rigged, or even to know it was wrong. At most they might see a news report along the lines of the journal paper.
About 12 years ago, I attended a different sort of conference at Dimensional Fund Advisors of which one of the co-founders was Gene Fama, who propounded the efficient markets hypothesis. His oft-times co-author, Ken French (Dartmouth B-School), gave a lecture pointing to several factors that caused the GFC, esp. surrounding mortgages. In summary, these factors were over-leverage (a common foible on Wall Street), financing long assets with short-term liabilities (a common foible among banks and other intermediaries), the daisy chain of paper underlying mortgages, which diluted investors' skin in the game, and errors by the rating agencies. The cleanest solution to all of these mistakes wouldn't be more and different rules but rather, and more simply, higher capital requirements, and perhaps more liability imposed on the rating agencies. Then all market players would have been more careful. Clearly, it didn't help that Congress insisted on Fannie and Freddie lending too much to sub-prime borrowers, although that was not a factor that French mentioned.
Economists working in D.C. give the whores a bad name.
From WSJ 3/13/23: "Mr. Frank once famously said he wanted to “roll the dice” to ramp up lending on Fannie Mae and Freddie Mac before they failed". With regulators like these, who needs heads-we-win-tails-you-lose bankers? Seriously, it takes government to do so much harm to so many.
Arnold, don't assume that people who push back against official narratives are necessarily low on the "agreeableness" factor of the big five personality traits (openness, conscientiousness, extraversion, agreeableness, and emotional stability). Yes, too much agreeableness can be associated with a failure to push back, but there are some who are above average on that factor who nevertheless do. Perhaps because they are also high on conscientiousness.
My favorite sentence:
"If you let government control the narrative, it will always say that problems come from the private sector, and the answer is to make government bigger and stronger." Yup.
I'm currently reading a little book called Leadershift, by Orrin Woodward and Oliver DeMille. They categorize ppl as credentialists, bureaucrats, entrepreneurs and builders. I see echoes here.
In addition your own work, what research do you think gives the most valuable insights into the financial crisis of 2008?
Engineering the Financial Crisis by Jeffrey Friedman and Wladimir Kraus
Excellent post! Thank you Arnold!