Author Topic: David Olive is boring  (Read 1624 times)

skdadl

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David Olive is boring
« on: August 24, 2009, 08:45:56 AM »
David Olive is boring.

David Olive is even more boring.

A number of PBers are writing about his silly misconception of the blogosphere; I got my links from Northwestern Lad/Cameron.

Croghan27

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Re: David Olive is boring
« Reply #1 on: August 24, 2009, 09:33:32 AM »
Quote from: skdadl
David Olive is boring.

David Olive is even more boring.

A number of PBers are writing about his silly misconception of the blogosphere; I got my links from Northwestern Lad/Cameron.

Olive is a economist .... he is supposed to be boring ... he is frequently correct and eminently sensible, but boring nevertheless. The arcane details of the operation of the economy are not exciting, even if important. He becomes more and more thrilling as he points out how dunderheaded, doctrinaire, politically driven (rather then designed for the public weal)  policies will playout in the world.
"It is also a good rule not to put overmuch confidence in the observational results that are put forward until they are confirmed by theory." -- Arthur Stanley Eddington

Croghan27

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Re: David Olive is boring
« Reply #2 on: September 05, 2009, 09:12:15 PM »
Not boring is Paul Krugman in today's NY Times. The eight page article titled: "How Did Economists Get It So Wrong?" may not be the final word in why the current economic conundrum is upon us, but goes quite far in explaining why it was not predicted.

There are two schools of economics - Keynesians (actually neo-Keynesians), that he calls Saltwatrer economists as their academic homes are along the American coasts; and Freshwater economists, those who come from places like Chicago and Minnesota.  Both sucked big time in seeing the calamity coming. In fact it seems that those who missed it by the widest margin are those most lionized and trusted to bring us out of it. People like Blanchard of MIT who is now head of the INF, and from the other side, Robert Lucas of the University of Chicago and, of course the seemingly omnipresent Ben Bernanke. Most denied that the economy was in a bubble and those that were 'bubblicious' had such faith in the mechanics of a free market they thought it would be self regulating. (As indeed it was, with an almighty thump.) We are still going ouch from that.  

It appears that the market did value the stock well; but they were valued compared to other stocks and had no relation to the actual internals and return providing value of the stocks. So junk bonds and the 'financial instruments' were well priced among themselves, but when looked at for a return (i.e. reality) were well over valued - the market had not and did not correct.

"Robert Shiller, did identify the bubble and warn of painful consequences if it were to burst." but Home-price increases, Ben Bernanke said in 2005, “largely reflect strong economic fundamentals.” Shiller is from Yale.

Whatever, both saltwater and freshwater advocates became enamoured with their theories and the lovely mathematics. That they had a decreasing attachment to the reality of the working place also slipped by them. There are actually sets of economists that think that major recessions are good things as they correct the market place: then there is the group that feels:
Unemployment is a deliberate decision by workers to take time off. (Don't laugh - this dude got hisself a Nobel Prize for coming up with that brain storm.

He ends the essay quotingH. L. Mencken: “There is always an easy solution to every human problem — neat, plausible and wrong.” to which croggy can only add that if all the economists in the world were laid end to end, they still would not reach a conclusion. (Not mine, but I enjoy the pun).
"It is also a good rule not to put overmuch confidence in the observational results that are put forward until they are confirmed by theory." -- Arthur Stanley Eddington

pogge

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Re: David Olive is boring
« Reply #3 on: September 05, 2009, 09:52:37 PM »
Quote from: Croghan27
It appears that the market did value the stock well; but they were valued compared to other stocks and had no relation to the actual internals ...
I thought the analogy Krugman provided for this -- credited to Larry Summers -- was apt: if a two quart bottle of Ketchup was selling for twice the price of two one quart bottles, they assumed the price of Ketchup itself was correct.

It's an interesting read. It's a brief history of macroeconomics written by someone who's pretty good at explaining this stuff to the lay reader.

Croghan27

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Re: David Olive is boring
« Reply #4 on: September 05, 2009, 11:05:07 PM »
Larry Summers (now Obama's #1 boy-toy guru for economics) comes off as another of the misguided economic masses. Krugman notes in a tribute in 2005 to (perhaps the grand-daddy of all economic fuckups) Alan Greenspan someone had the termidity to warn "that the financial system was taking on potentially dangerous levels of risk"   He was mocked by almost all present — including, by the way, Larry Summers, who dismissed his warnings as “misguided.”

Perhaps this thread should be renamed "The Parables of Krugman" - as the story of the Capitol Hill Baby-Sitting Co-op finally made it clear to me. I had seen it before, but this time I made all the connections.
"It is also a good rule not to put overmuch confidence in the observational results that are put forward until they are confirmed by theory." -- Arthur Stanley Eddington

pogge

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Re: David Olive is boring
« Reply #5 on: September 06, 2009, 07:22:16 PM »
Coming full circle, David Olive has what I think is a not-boring post on economics based in part on that same Krugman article.

Croghan27

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Re: David Olive is boring
« Reply #6 on: September 06, 2009, 07:51:46 PM »
Quote from: pogge
Coming full circle, David Olive has what I think is a not-boring post on economics based in part on that same Krugman article.

I certainly covers many bases, pogge - all of man, woman, birth, death and infinity, to quote Dr. Zorba. I wish he had included or mentioned the unpaid labour of women in the home, but that is a quibble.

I had not gone to Krugman's blog - having an important football game to supervise - I shall do so tonight. Sometimes the blog is only short quips and sometimes it is rather lengthy pieces that should be part of the main articles.
"It is also a good rule not to put overmuch confidence in the observational results that are put forward until they are confirmed by theory." -- Arthur Stanley Eddington

skdadl

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Re: David Olive is boring
« Reply #7 on: September 06, 2009, 08:05:08 PM »
Not that I'm proposing to do anything about this, given what happens when I do, but peeps might remember that this began as a thread in the Blogging Issues forum about Olive's loose opinings about the blogosphere, nothing to do with economics as such.

No one actually picked up on the OP, although pogge wrote a blogpost about it. (Later, I might note.)

Och, weel, you win some; you lose some; and some are rained out.

Anyway, if anyone is proposing new names for the thread, please insert as well suggestions re forum it might move to. And we'll just forget that David Olive is talking through his hat when he talks about the blogosphere.

 

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