tag:blogger.com,1999:blog-6798074091942701235.post1927985337542523262..comments2024-03-29T01:35:09.550-04:00Comments on Can Turtles Fly?: The Atlantic's Paul Samuelson InterviewSivaram Vhttp://www.blogger.com/profile/06361276466660862882noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-6798074091942701235.post-1463484024884333832009-06-26T10:23:08.000-04:002009-06-26T10:23:08.000-04:00You are right about career risk. That's one re...You are right about career risk. That's one reason I respect people in these positions.<br /><br />There is also an element of leadership at play. Leaders are generally required to say something positive and improve morale.<br /><br />But the thing is, if something blows up, they are going to get blamed anyway. In fact, what if they are making it worse and hence end up with an even worse scenario?<br /><br />I can see Greenspan doing what he did. Almost all the market participants, except some disgruntled ones from certain corners, loved Greenspan and agreed with everything he did. The economic profession also held him in high regard, again, except for some. But Bernanke has a clean slate and there was no pressure to speak of.Sivaramnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-14821788876104237212009-06-26T10:15:41.000-04:002009-06-26T10:15:41.000-04:00There is no such thing as unbiased economics :) I...There is no such thing as unbiased economics :) I'm not as familiar with economic books so can't say what is a good history. Perhaps the best thing to do is to read multiple books from different viewpoints and form your own opinion. One can't go wrong with the classics by Adam Smith or some of David Ricardo's essays (for instance, <a href="http://en.wikipedia.org/wiki/Paul_Samuelson#Miscellaneous" rel="nofollow">Samuelson once said</a> that the most non-trivial and correct theory is all of social sciences may be Ricardo's theory of comparative advantage.)<br /><br />So, sorry, don't know of any good economic books to recommend...Sivaramnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-81455657541571572822009-06-26T03:21:36.000-04:002009-06-26T03:21:36.000-04:00Sivaram,
concerning Bernanke and the bubble, ther...Sivaram,<br /><br />concerning Bernanke and the bubble, there is also an element of career risk, in the sense that he might call the bubble, have it burst, and then find he owns it. I can imagine plenty of unhappy houseowners/banks blaming him for their losses, rather than their own imprudence. Ditto for Greenspan.<br /><br />For people like us, with no real responsibilities, it is always tempting to ignore the political fallout. I just wonder to that extent they believe the green shoots/no bubble mantra, and to what extent they feel it is their duty to do so. Of course, one could argue as well that central banks are independent for a reason, not to be subject to political considerations, but not all central bankers are like Volcker, and then he came after a decade of inflation, when the situation was quite bad.Zitronnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-73357509059696619682009-06-25T23:10:51.000-04:002009-06-25T23:10:51.000-04:00Great post! As you said, it sheds light on a few i...Great post! As you said, it sheds light on a few interesting characters.<br /><br />By the way, do you know any good book on unbiased <span>economic history? <br /></span>John Ynoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-33213052966213568762009-06-25T21:09:20.000-04:002009-06-25T21:09:20.000-04:00One more thing...
This is a great interview becau...One more thing...<br /><br />This is a great interview because I get a feel for the thinking and character of various individuals. For a long time, I never understood how Ben Bernanke couldn't see the housing bubble. People like me, who got blown up with our investments (Ambac for example), underestimated the degree of the bubble but I thought it was a bubble. Many, including me, were pretty certain there was a bubble. I didn't have a blog at that time but that was my feeling. It seemed bizarre to me how Bernanke couldn't see it.<br /><br />Maybe others already knew it but I only realized why Bernanke couldn't see it after reading this Samuelson interview. Bernanke clearly believed in the market--even an irrational one. Blindly following the market led to his mistake.<br /><br />This is probably why he also is somewhat bullish right now (green shoots speech; recent FOMC meeting saying things are recovering (whereas Buffett doesn't see much improvement)). Bernanke is interpreting the situation based on the market. The fact that the stock market is up 30%+ and credit spreads have narrowed is taken as if the economy is recovering. Yet, if you did not look at asset prices, you would have a hard time coming to that conclusion based on the economy.<br /><br /><br />I think it is becoming obvious to everyone that blindly following the market, especially asset markets, is a disaster in the making...Sivaramnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-61229008882021593712009-06-25T21:00:58.000-04:002009-06-25T21:00:58.000-04:00I'm not familiar with economists, other than s...I'm not familiar with economists, other than some who are into macroeconomics and hence overlap with investing at times. I don't really know if Samuelson ever wrote a book critiquing pure free-market theorists, such as Austrian Economists, Monetarists, classical economists, and so forth. The book he talks about in the intervew seems to be a textbook and I'm not sure if he would be critquing other views. Part of the problem with economics is the fact that the different schools seem detached from each other. Anyway, if you read the book, let me know it is. I won't be reading it because it won't help investing and I already have a ton of other books to read, but I'm curious.<br /><br /><br />I'm not an economist but speaking as an outside observer, the problem with Austrian Economics, at least to a liberal like me, is that it does not consider the political aspect of life. As far as I'm concerned, Austrian Economics pretty much died with the Great Depression. The liquidationist theories were a disaster and once we went off the gold standard, that was it. Austrian Economics seems popular because there are a few outspoken investors, such as Peter Shiff or Jim Rogers, who seem to support it, but I don't think even 5% of the population in America supports it. Monetarism, which shares similarities (except it doesn't rely on hard currencies), is probably where the competition is.Sivaramnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-16830969693356652602009-06-25T11:03:54.000-04:002009-06-25T11:03:54.000-04:00Good post. I feel like reading his book now. I h...Good post. I feel like reading his book now. I have an okay grasp of the basics, but would like to get into more detail of the flaws in the rational market and austrian theorists.outspokennoreply@blogger.com