Comments on: Scientists and bankers — a new model army

By: Editor

Editor — Thu, 10 May 2012 14:02:06 +0000

You laugh, “something,” but you won’t laugh when the Eye-bots visit! heh heh

By: something

something — Thu, 10 May 2012 13:52:22 +0000

good job hahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahha

By: Ron

Ron — Tue, 17 Apr 2012 14:43:15 +0000

Pleasantly surprised by the quality of the comments here. When I first read the post, I thought I’d have point out that there were models that did predict the collapse, namely Austrian School Economics. Those models were written off because they don’t support certain political motivations. Nothing has been fixed and we continue to do the same things over and over again expecting different results, the definition of crazy.

This man predicted the crises …
http://www.youtube.com/watch?v=ZV7AFUXvHmo
http://www.youtube.com/watch?v=pvlUx5ECD2w

By: laughin

laughin — Sun, 15 Apr 2012 14:38:39 +0000

somehow doesnt trust big government ‘scientific’ rationales when i.t comes to going after money Oh yes the fox just wants to study the physics of the henhouse door… to make sure the ‘design’ is optimal and ‘safe’

By: 4nonduopoly

4nonduopoly — Sun, 15 Apr 2012 03:37:00 +0000

Joe B (below) has it right.. As does Ry Cooder in “Leave No Banker Behind” – However, we have an entrenched two party poliitical system. Our “elected” officials always dialing for campaign dollars.(free speach?) to pay for attack ads (which should be minimized via “real” debates on “our” airwaves). This is done hoping to “represent” those who give the most, bankers included. When the republic was founded there was no Fereral Reserve porviding a safety net for those taking risks with other peoples money.

By: Joe

Joe — Sat, 14 Apr 2012 02:18:08 +0000

I read the economist, they knew it was a bubble and said so. I sold and made a $100,000 off a $12,000 investment. They said buy and I have with good results. I do not know what they are talking about when they say “Existing financial models failed to predict the crisis of 2008″.

By: Tab Cocovillea

Tab Cocovillea — Fri, 13 Apr 2012 18:45:06 +0000

Very surprised with the quality of the bull-cutting comments here. There was nothing a good collapse wouldn’t have fixed, but by allowing corrupted markets and institutions to continue this recession/depression has been exacerbated.

By: Gabe Potter

Gabe Potter — Thu, 12 Apr 2012 16:54:17 +0000

The evidence of system-wide rot that caused the 2008 crash wasn’t “missed” by financial models that “failed to predict” the crisis; it was purposefully suppressed and ignored by essentially ALL the major players because they were all in on it. Anyone who raised the rather obvious issues was shouted down or marginalized as a kook. “Don’t rock the boat” is the motto today as it was 4 years ago. I highly doubt any amount of modelling is going to save us from ourselves when we continue to be willfully ignorant about the realities of such matters, and those who hold the purse-strings still control our global institutions. See ya in 4 years guys.

By: Joe B

Joe B — Thu, 12 Apr 2012 15:47:26 +0000

Typical academic seeking to use state coercion to make his research a little easier. The Austrian school of economics disregards statistical modelling in general, and was predicting the crash for years before it happened based on their understanding of dynamic capital structures and credit dynamics. Steve Keen does use statistical models, and predicted the crash in 2005 based on debt dynamics. All the data in the world won't help anyone unless they have a valid theory to plug it into. Neoclassical/Keynesian economics has repeatedly been proven invalid both logically and empirically with every fluctuation in markets. That's what happens when a theory excludes any realistic conception of time, capital structure, or money. The cause of the crisis was credit expansion. The solution is 100% reserve requirements for demand deposits, with no central banks and no bailouts. Under these conditions, the vaguely defined "risk" data will be a small, uninteresting set. Lender assumes risk.

By: spikosauropod

spikosauropod — Thu, 12 Apr 2012 14:51:57 +0000

The banks went broke because congress made them loan money to people who couldn’t pay it back. This meddling is what caused the crisis. More meddling won’t make it better.

But that’s beside the point. Where on earth did anyone get the idea that scientists have a superior understanding of finance? How many rich scientists do you know? Did anyone look into the credentials of the people who are already in finance? Trust me, they know what they are doing.

Next problem.

By: R Self

R Self — Thu, 12 Apr 2012 14:02:38 +0000

Too much “should” and “could”. It talks about not following the herd. That is human nature and part of the securitisation problems and the sub-prime mortgage problem.

Very profitable until it exploded.

Also, it would only catch a bubble like the one before (group think). It would probably not catch the next one.

He talks about not predicting either 2008 or the 20011/2012 Euro crisis. They were predicted by some “maverics” who did not follow the crowd but were dismissed as crazy. No quantitative systems model would have been able to predict the Euro crisis any better than the traders did. The Euro crisis was caused by the politicians who continually kicked the problem into the long grass hoping for a political solution, and continue to do so. Let’s wait for Greece to exit the Euro and see what happens. Most of the Finance world is predicting this.

We need to remember the following aphorism.

The government [is] extremely fond of amassing great quantities of statistics. These are raised to the nth degree, the cube roots are extracted, and the results are arranged into elaborate and impressive displays. What must be kept ever in mind, however, is that in every case, the figures are first put down by a village watchman, and he puts down anything he damn well pleases.

((1849 – 1941) UK HM Collector of Inland Revenue)

By: gaoptimize

gaoptimize — Thu, 12 Apr 2012 12:30:03 +0000

I’m afraid PhD Liechty hasn’t come to accept that all the big (TBTF) banks are insolvent and the last thing they (politicians, crony banksters) need is a calculation of the amount of inflation and bailouts that would be needed to make them solvent. It is as simple as 1) market-to-market on their real estate collateral/book, 2) acknowleging that housing will not recover for a generation, and the MBS, CDS, and all the derivatives they support come crashing down. They can’t handle the truth and they certainly don’t want some irrefutable high fidelity model exposing it.