Bill White Speech

[oddlots]

Great, great drawstring speech from Bill White of the Bank for International Settlements:

http://www.nakedcapitalism.com/2010/...xt-crisis.html

Bill White belongs in the handful of honourable public servants that were smart enough to see this coming a mile off and sound the alarm bells, to no avail.

There's an interesting moment where he says Bill Poole told him that, in all the FOMC meetings he attended that no mention was ever made of the kind of dire warnings coming out of the BIS (via White, at least) regarding aggregate debt levels for instance.

That is kind of stunning, depending on your level of cynicism. (It's too spring-like today to harbour dark thoughts about cabals, so I'll say it's stunning.) That should get the discussion going.

[Chomsky]

Re: Bill White Speech

Terrific piece, thanks much.

[Spartacus]

curioser and curioser

>> the models almost all economists use are ‘flow’ models which leave
>> no room for ’stocks’ and thus completely miss unsustainable secular
>> trends

And yet, what is Steve Keen's main critique of modern economics?

IMHO Keen and White are both completely wrong - just like in any other industry and profession, the economists and the house appraisers and the quants gave the managers the results that were needed to make the sale. (not that the managers had to push too hard - many of these folks stood to benefit as well, or at least not get fired)

Lereah was NOT using bad models - ANY MODEL IN THE WORLD would not have altered his message.

In compuers, in databases, in autos, in bridges, it's over-promise and under-deliver. Anything to keep the game going.

[marvenger]

Re: curioser and curioser

at least they're trying to build a powerful logical arguement to counter that of the ones that foster bubbles. When the people are finally too sick of the effects of the policies of those in power they might vote in someone who is speaking in keensian terms coz it makes more sense.

[oddlots]

Re: curioser and curioser

>> the models almost all economists use are ‘flow’ models which leave
>> no room for ’stocks’ and thus completely miss unsustainable secular
>> trends

And yet, what is Steve Keen's main critique of modern economics?

IMHO Keen and White are both completely wrong - just like in any other industry and profession, the economists and the house appraisers and the quants gave the managers the results that were needed to make the sale. (not that the managers had to push too hard - many of these folks stood to benefit as well, or at least not get fired)

Lereah was NOT using bad models - ANY MODEL IN THE WORLD would not have altered his message.

In compuers, in databases, in autos, in bridges, it's over-promise and under-deliver. Anything to keep the game going.

I think that White recognises that when he talks about pro-cyclicality among other things and the obvious propensity of governments toward "short-termism." I don't think he's naive by any means, just polite.

But I do think that shoddy theories and laughably unrealistic models give cover to the self-dealing even if these theories predominate because they give participants this cover. So I think there's a role for a) exposing the shoddiness of the thinking and b) offering a more robust replacement. It's not the war, it might not be even the decisive battle, but it is still a necessary groundwork before we head forward into what I fully anticipate is going to be a pretty crummy decade.

Think of Minsky. If you've read him, didn't you find it hard to think of markets in the same way after? Theory can be very powerful.

[Rajiv]

Re: Bill White Speech

I am embedding the video below. However, Edward Harrison's post from which this video is taken is well worth a read.

[reggie]

Re: curioser and curioser

the economists and the house appraisers and the quants gave the managers the results that were needed to make the sale[/B]. (not that the managers had to push too hard - many of these folks stood to benefit as well, or at least not get fired)

Lereah was NOT using bad models - ANY MODEL IN THE WORLD would not have altered his message.

Modeling science has sufficiently advanced, along with computing processing power, so that any output can be created from any input. Hence, outputs are de-linked from inputs, with virtually zero correlation between the two.

[reggie]

Re: Bill White Speech

Great, great drawstring speech from Bill White of the Bank for International Settlements

While somewhat off-topic, I just can't let his "little" comment in the first 2-mins slide by. White says that while the politicians, theoreticians, policy makers, etc. have all made mistakes, what binds them all together is the ring in the lord of the rings. How brutally honest of Mr. White. While I'm no movie nut, I know enough to realize that the ring provided the dark force depicted in the movie with control over all of middle earth. Well, at least White cops to the game that's being played-out. So, I'll give him props for that.

[oddlots]

Re: Bill White Speech

I don't know Reggie, maybe his folksy delivery is just a cover for a black, black heart...

Give the guy a break. He's been consistently warning of the debt bubble for years.

If you expect the BIS to hire Michael Hudson in an oversight position then I think your expectations are too high.

But the comment you highlight is kind of creepy, I'll give you that.