Although I find myself disagreeing with Barry Ritholtz more frequently these days, I think his post today about bailout counter-factuals is pretty much dead on, and is a must read.
"My disagreement with the Zandi-Blinder report is not its theoretical underpinnings — it is by definition a hypothetical counter-factual. Rather, it is the counter-factual Blinder/Zandi used: “What would the economy look like now if we had done nothing?”
Instead, I propose a better counter-factual: “What if we had done the right thing, instead of nothing — or the wrong thing?”"
Click on over to Barry's blog to read the whole thing.
-KD
4 comments:
Yup. His post is on the money. Maybe a little too sunny in its estimation of where we'd be BUT it definitely isn't Monday morning quarterbacking. The voices advocating these exact suggestions were drowned out or ignored by the panicking powers that be (just read Too Big To Fail or The End Of Wall Street if you doubt).
I liked that post; I have always argued wee would have had a worse timeeeeeeee up front, but we would be better off sooner.
Well there is always an issue with presenting a counter-factual when you essentially have to make stuff up to shoehorn it into your scenario - like misrepresenting what Sweden did, misrepresenting BSC shareholders as being bailed out, misrepresenting JPM exposure to BSC, misrepresenting the possibility of BSC being bought by someone else, etc etc etc.
I haven't read much of Mr Ritzholz's stuff but what I have read makes him seem like a loud-mouth lying fraud.
Danny
asset prices would have dived to about 20% of where they had been, the arabs and chinese would have bought everything up for a song and extracted rents in perpetuity
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