Comments 18

2008年败在何处？

Jan 28, 2015 J. Bradford DeLong

伯克利—要解决问题，光知道做什么是不够的。你实际上必须实施解决办法——并且在事实证明你知道的并不如你认为的那样多时，你得愿意改变办法。这就是两本新书一起告诉你的信息。这两本新书讲述了你需要知道的关于2008年金融危机的一切：什么引起了金融危机，可以做什么防止它再次发生，以及为何这些事情还没有人去做。

第一本书是《变化和冲击》（The Shifts and the Shocks），作者是保守派英国记者马丁·沃尔夫（Martin Wolf）。在书的开头，他对酝酿了至今仍在影响世界的这场经济灾难的重要变化做了归纳编目。首先，他指出世界最富有的0.1%和0.01%人群财富剧增，这给人民、政府和公司造成了日益不可持续的高负债的压力。

与此同时，决策者因为“有效市场假说”等经济理论的广泛接受而志得意满，有效市场假说认为投资者的行为是理性的，在作出决策时会利用一切可获得的信心。结果，市场监管被放松，交易被认为安全但实际并不安全的资产变得更加容易。结果，系统性风险悄然酝酿，并且超过了央行官员最大胆的想象。

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J. Bradford DeLong

Writing for PS since 2002
196 Commentaries

J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

0 Comments on this paragraph, 30 in all 30 Comments on this article

Gareth Downing Mar 23, 2015

The irony of the this article is the use of a photograph of the Reserve Bank of Australia, Australia being one of the few advanced economies to avoid a recession in 2008 due to the usage of stimulatory economic policies.
Ben Leet Feb 2, 2015

Wealth increased by $25 trillion since 2008 in the U.S., the QE policy and monetary strategy worked very well for the richest. A wage led recovery is by definition the only recovery. Between 1933 and 1937 unemployment dropped from 25% to 9.6%, and in the early 1940s the number employed increased by 40%. That would be impossible today, but public works, infrastructure, basically taking the unused surplus from the wealthiest and applying it to infrastructure, education, a green energy economy would do nothing to damage the wealthy and everything to improve everyone. It's about time we read some progressive analysis in this P.S site.
Gary Palmero Feb 1, 2015

The simplest definition of an economic depression is a period which it is nearly impossible to obtin a positive return on investment unless one is protected by a government enforced rent. The world economy is slowly drawing to that set of circumstance. Credit is currently misallocated because of very low interest rates, debtors can hold creditors hostage and policy makers do the bidding of the rent seekers and rent owners...not a pleasant set of circumstances. Meanwhile, self financed entities (mainly in technology) are acting as disruptors on long established protected franchises creating what could be the first genuine overall labor surplus in the recordable history of manking.

A bold new policy is needed. Rent seeking won't do it, income transfer at the point of a gun won't do it and free money won't either. Disruption will be with us for a while, those who can figure out the solution or the right bet will be the new uberclass.
Allan Bleiken Feb 1, 2015

One word - GREED!

It is difficult to believe that untold thousands if not millions of people throughout the world essentially lost everything - their jobs, their savings, their homes, and their future, all for the sake of greed and I might add, corruption. It is interesting to note that untold thousands of bankers, investors, and Wall Street tycoons, were allowed to do what has essentially been deemed as illegal and they got away with it. How many thousands of these people had massively inflated paycheques and bonuses at the expense of the families that lost everything? And what percentage of them ever paid back one nickel for their ill begotten gains? And what do the bankers, paid politicians, and Wall Street tycoons want to do now - go back to the same old system which would allow them to do it all over again. God help American families and God help the world.
- Robert Wolff Feb 3, 2015
  
  There is no difference between greed and corruption. The Pakistani elites established a culture of greed, which led to magistrates in Waziristan using police to steal the property of Pashtuns, and raped daughters and kill sons of landowners who would not give up their property. The Pakistani were consequently assassinated and replaced in high political positions, but the conflict goes on.
  
  Greed and corruption are the same thing.
- Robert Wolff Feb 3, 2015
  
  There is no difference between greed and corruption. The Pakistani elites established a culture of greed, which led to magistrates in Waziristan using police to steal the property of Pashtuns, and raped daughters and kill sons of landowners who would not give up their property. The Pakistani were consequently assassinated and replaced in high political positions, but the conflict goes on.
  
  Greed and corruption are the same thing.
William Pu Feb 1, 2015

Most people assume "policymakers" are the so called elected officials of the western "civilization". From my simple minded perspective, "policymakers" are only the overseer and ranch hands and those who finance their (re)election efforts are the owners of the plantations. When money is equated to free speech, the cotton picking citizens will never see the daylight.
During the last US presidential election each candidate amassed more than one billion US$ which amounts to 2500 years of a US president's annual salary. We all know one works for the man who pays you. No?
dan baur Jan 31, 2015

Is anyone not teaching socialism at Berkley?

"rise in wealth of the 0.1%... people, governments, and companies to take on increasingly unsustainable levels of debt" - this actually works in reverse - stupid people take unsustainable debt and smart people profit from that.

“efficient-market hypothesis” - has nothing to do with policymakers - it pertains to investors. How do you infer "markets were deregulated as a consequence"? They are unrelated. Besides, you sure benefit from a deregulated airline industry - how come you don't complain about that?

"The resulting policies were enough to prevent the post-2008 recession from developing into a full-blown depression" - good enough for me. What else did you expect?

Why are we still talking about "recovery and stimulus" 7 (SEVEN) years after the crisis? How have Keynesian policies worked in the 70s and more recently in Japan? Hasn't been Europe Keynesian forever? Wasn't the Iraq war a Keynesian stimulus war?
Robert Wolff Jan 31, 2015

The money system is the tool of those in political power - and is always used to maintain their power no matter how ill equipped they are to rule. That is the lesson that "will never truly be learned."
G. A. Pakela Jan 30, 2015

Perhaps Professor DeLong should look for an explanation outside of the existing model for the tepid recovery since the onset of the recession in 2008. The economic headwinds in the recession of 1982 - 1983 were far worse - expensive oil, high inflation, super-high interest rates and the exposure of major banks like Citi to emerging market debt. Why did the U.S. economy power out of that recession in spite of double digit real and nominal interest rates? It was part of the demographic explosion that was the baby boom, and all of those boomers coming of age in the 1980s as they reached their peak consumption years. What is different today is that those boomers have not only passed their peak consumption years but they tapped out their ability to take on debt to pay for consumption. The financial crisis had little to do with the subsequent weak recovery as the prior recession demonstrated - a 50% drop in the stock market, the "terror" shock of 9/11 and a recession already under way. The recovery of the 2000s should be viewed for what it was - the last gasp of debt-driven consumption combined with an aging baby boom sliding into retirement.
Per Kurowski Jan 30, 2015

In July 2012 Martin Wolf wrote: “As Per Kurowski, a former executive director of the World Bank, reminds me regularly, crises occur when what was thought to be low risk turns out to be very high risk."

And yet to take it from there, to an understanding of how silly and dangerous and sort of 180 degree wrong the current credit-risk-weighted equity requirements for banks are, seems to be a too long intellectual distance for Wolf (and many other) to travel… How come… is more-risk-more-equity and less-risk-less-equity a too powerful intuition?

http://subprimeregulations.blogspot.se/2014/11/no-martin-wolf-arrogance-and-stupidity.html
Stamatis Kavvadias Jan 30, 2015

"Third [there are two more], in creating the euro, the Europeans took their project beyond the mundane into something far m0re important. The economic troubles of crisis-hit economies are evident: huge recessions, extraordinarily high unemployment, mass emigration and heavy debt overhangs. The constitutional disorder that has resulted remains insufficiently emphasized. Within the the Eurozone, power is now concentrated in the hands of governments of the creditor countries, principally Germany, and a trio of unelected bureaucracies -- the European Commission, the European Central Bank and the International Monetary Fund. The peoples of adversely affected countries have no influence upon them. The politicians notionally accountable to them are powerless. This divorce between accountability and power strikes at the heart of democratic governance."
Martin Wolf
The Shifts and the Shocks

Now, about your "intellectual failure" argument and Wolf's restriction of the democratic deficit to Europe. The failure is of the elites and it is highly questionable if it is not intentional, so as to call it intellectual, for individuals holding key positions, at the top of governments and financial institutions. The alienation of governance decisions and directions from extensive portions of the public is not an issue only in south Europe. It is very comfortable to call it just intellectual failure and limit it to economics. This is a capture of the political process in excuses from economics.

Representative, so called, democracy that allows 4 or 5 years of governance, by 2-3 out of 4-5 groups of national elites (parties), and a day of public "choice," limited to the mix of the 4-5 mixes of policy they advocate, is not democracy. In democracy there is no public voting for representatives and officials; *public voting is for decisions*. This is simple representation. Though much better than the case in the Eurozone, it is not democracy, and the divergence is apparent in the consensus that *no action is to be expected* to really address the causes of the crisis, much more the defrauding banking executives that have gone away with outrageous amounts and the bankers that globally perpetuate the reason for increasingly more missing money.

In democracies, the state has the right to enforce its will retrospectively --the public gives this right to itself. Today's policy makers do not have this legitimacy, mostly because they do not want it. Your friend JBS, below, is not right; Jack Sparrow is.

Thank you for your article, anyway.
- Robert Wolff Jan 31, 2015
  
  The intellectual failure may not, as you imply, be that of the elites - because they benefited from it - but that of society that they let the elites corrupt the money system in their push for political power.
  
  The elites simply dissociated themselves from the issue of maintaining a viable Capitalism in order to usurp power - an intellectual decision that they would not have made if they believed their power rested on maintaining Capitalism.
- Robert Wolff Jan 31, 2015
  
  The intellectual failure may not, as you imply, be that of the elites - because they benefited from it - but that of society that they let the elites corrupt the money system in their push for political power.
  
  The elites simply dissociated themselves from the issue of maintaining a viable Capitalism in order to usurp power - an intellectual decision they made that they would not have made if they believed their power rested on maintaining Capitalism.
Jose araujo Jan 29, 2015

What about the role of FRAUD and criminal activities?

Insteresting on how many people try to explain what happened with normal, neutral, rational behaviours when in fact e experienced one of the major FRAUDS prepetrated in recent history.

Subprime wasn't a bubble, there was no credit bubble in the first place. Subprime crisis was a FRAUD, so it was in Portugal with the banks that failed, in Ireland and Iceland.

The same happened with junk bonds and other failures of market efficiency, because they were not failures of the market they were criminal activities where many profited from the outcome.
- Jose araujo Jan 30, 2015
  
  By the way, its not a bankers problem, its an agency problem.
  
  The holders of capital are the ones that lost the most due to this fraudulent behaviors from their agents.
  
  The list of CEO's, boards that act against the interest of the stakeholders are immense, and they are the root problem of the latest crisis we have experienced.
  
  In some way, this explains why we are living on a period with so strong risk avoidance, the fact is that we don't believe in the institutions, we don't believe that auditors are doing their jobs, that CEO's act on the interest of minoritaries, etc..
  
  Risk premia is so high because institutions have failed and nothing has been done to protect investors.
- Jose araujo Jan 30, 2015
  
  I think we have to distinguish fraud and scams from normal market behavior.
  
  Take the sub-prime crisis, now you can say bankers were acting in good faith, but we know that bankers knew the loans were not good, and that the securitization of those loans were fraudulent. This was a scam a fraud, not some kind of speculative exuberance phenomena.
  
  The same happened a few years ago with junk bonds.
  
  This are ponzi schemes, not rational behaviour.
  
  The same goes to the so called real estate bubble, take Spain or Portugal for example. We are not talking normal loans, because if you take into consideration the delinquencies in mortgages there are no evidences of bubbles. The bubble happened in real estate promotion (golf courses, etc) where there was a collusion between who lend the money and who asked for the loan. Banks knew the collaterals were not good.
  
  Same goes for most of the problems is markets, the derivatives scam, etc etc
- Michael Public Jan 30, 2015
  
  I think pointing the finger at the fraud is counterproductive - like saying - "it was just a few bad apples and a once-off event". Rather look to what lay the groundwork for bankers to act against the general good - it was the factors that are mentioned in this article.
- Michael Public Jan 30, 2015
  
  I think pointing the finger at the fraud is counterproductive - like saying - "it was just a few bad apples and a once-off event". Rather look to what lay the groundwork for bankers to act against the general good - it was the factors that are mentioned in this article.
- Stamatis Kavvadias Jan 29, 2015
  
  Could you elaborate on that? You mean banks coordinated in lending intentionally? That *would* be a bubble. You mean policy makers, regulators, and central bankers were in on it? Which was the fraud?
Hugo Penteado Jan 29, 2015

The fundamental reason why global economy is prone to constant crisis is our growthmania in a finite planet. What this ideology based on a false theory causes is the worst decisions are considred the best. For instance, in the economic field, the economic process is considered neutral to the environment. More than that, the myth of total separation between economy and Nature is embedded in all economic fields. For this reason, the planet is considered the subsystem of the economic system, a clear absurdity, since the major system is the planet and its irreplicable essential ecological services. All economic activities today are disrupting ecological services and not even a single important economist has nothing to say about it. For instance, Brazil is heading to become a desert because 1.200.000 of km2 were already destroyed in Amazon forest. Smithsonian Tropical Insittute and brazilian scientists are alarmed, it is a non-stopping destruction, very similar of what it was observed in US and Europe, both regions destroyed almost 100% of its natural forests. The problem is not only for Brazil, since 2/3 of global rains are direct or indirectly dependent on Amazon forest. To give an idea, all trees in Amazon releases 20 trillions of water liters per day, but this amount is being reduced year by year and the threshold means that the forest can die alone, without human deforestation, forest will not be able to produce the conditions to continue alive. For the economists around the world, including Martin Wolf, the value of a tree exists only when she is on the floor. The cost of change Amazon forest into a monoculture, in this ideology, is zero. But the naturally free water produced in Amazon would require the energy of 50.000 hydroelectrical usins like the Brazilian Itaipu. Conclusion: these two books are not addressing real vital questions about why we are in a very fragile economic situation: planetary limits to growth and growthmania demanding the worst decisions in centuries.
Gimel Wicaksono Jan 29, 2015

Too many political factors play roles in determining the policies. Those who are in the very top of income distribution, have very much influence in the decision making process. This is not just related to those who in the very top but the whole groups associated with them, military generals, private firm top managers, leading economists, social observers, government owned firms and many leading politicians. The big corporations and government institutions need certified comments from leading consultant companies headed by politicians and economists to support the justification of policies they conduct. This could be based on market perception surveys, people's confidence index, focus group discussions etc. The results should be at least in line with the big framework of the policies. Walla, everything is designed to be like that. Those who are maybe "pure" thinkers might not have enough capabilities to influence the people other than give their opinions on the published media. Even, those who give comments or analysis on the media, some of them, not all of course, are paid behind the screen, under "other" government projects, to support the government's policies, to counterattack the comments or sometime to raise the issues which become dilemma just to shift the majority's opinion from the real problem. This is a part of the game, played to hide the real problem in a country. Raising new issues to shift the audience's attention to other unimportant aspects, counter-attack the issues (rarely done since decision makers prefer the first one), censoring the media not directly but using halting "generous" loans, disrupting the competition, and so on till the violence one, which might not be executed before all the previous efforts failed. So I guess, there are always pros and cons and when it's over, everyone, tries to make a claim that the policy was correct, partly to boost their performance in the eyes of the people. Too many interest groups hovering around decision makers, which are not easy to influence simply because they are so powerful ....
- Robert Wolff Jan 31, 2015
  
  Basically agree - the elites decided to usurp power. The group that Ronald Reagan led started that process because they were threatened by the prospect of Socialism. The were willing to eliminate Capitalism in order to maintain their power.
  
  Basic psychology tells us that their willingness to dissociate themselves from the maintenance of Capitalism was not based on love but on hate - Fear is the motive that drives you to love (associate) others or hate (dissociate) others and it is always driven by the situation that causes the fear.
  
  The elites were so afraid of losing power that they usurped the system of Capitalism which was their path to power. As Vladimir Lenin stated, "Contracts are made to be broken".
John Brian Shannon Jan 29, 2015

Hi Bradford,

A pleasant read and I agree with many of your observations.

I also agree with many of the points by Wolf and Eichengreen -- however, terming our lack of response to negative economic performance as (purely, or mostly) "intellectual" is wrong, in my view.

"The problem is not the problem. The problem is your attitude towards the problem." -- Captain Jack Sparrow

It's more human psychology when we *know* what to do to fix the problem, but are too cautious or too afraid to have the courage of our convictions to implement known solutions.

Those with a slim majority in their house of government, will act a lot less bravely than those with a solid majority backing them.

That's not "intellectual" strictly speaking, that's well into human psychology territory.

Another point; The Scale of the Problem matters.

Humans, when confronted with an easily-solvable (small) problem, can defer making a decision (other things may prioritize higher) knowing that they have the luxury of time to deal with it.

But when a truly massive problem suddenly appears on the horizon, the typical human response is to stare at it in horror (which sometimes allows the scale of the problem to increase) so the deferring I mentioned in the previous example, turns into outright wallowing.

It's as if a psychological switch in the brain trips, routing energy away from taking action.

Eventually, someone with a stronger psychology arrives on the scene and proceeds to make short work of the economic mess, or other problem.

Am I blaming economists for this?

No. It takes political power to get bills passed.

As WWII began to take shape in Great Britain, what people *wanted* to hear was Neville Chamberlain's soothing appeasement -- but to *win the war* the British people needed to cross a certain psychological threshold -- and elected Winston Churchill for the win.

Winston, of course, had crossed that psychological threshold decades previously and was not only bold, but brilliant.

And, as every golfer knows, sometimes you need the deft touch of the putter (Neville), other times you need a cast-iron blunderbuss to blast you out of the weeds (Winston).

Each has its place. But the driver does not belong on the green, nor does the putter belong in the rough.

Selecting the right politician during economic downturns is everything and in my view, 90% of it is getting a psychologically powerful leader with a strong majority in place and in time to make short work of the problem.

Most of the "intellectual" part can come from the economists (regarding the economy) or professional lifelong military members (during time of war) -- while getting that on paper and done is the job for the leader and his/her political party.

As always, best regards, JBS
Marc Laventurier Jan 29, 2015

You're wallowing in what failed in 2008: How is the efficient-market hypothesis any less ridiculous than the conceit that it is not natural "to have thrown away 10% of their potential wealth"? The unselfconscious commitment to narrow conceptions of growth that are the root motivation for this brand of economics and commentary subvert any claim to intellectual rigor; you know the answer before you begin, and will forwardly guide, inflate, financially repress, bail-in and otherwise manipulate'efficient-market' incentives in any way possible. This IS policy, namely capitalism, and there's nothing all that intellectual about it.
Kris Henderson Jan 29, 2015

One could suggest that nothing failed in 2008.
In fact Eichengreen said himself, the response to the crisis led the way to policies of austerity and structural reform; or in other words the dismantling of the state and more wealth to the top 0.01%.
Nothing failed, everything went as planned.
- Robert Wolff Jan 31, 2015
  
  Basically agree - the elites decided to usurp power. The group that Ronald Reagan led started that process because they were threatened by the prospect of Socialism. The were willing to eliminate Capitalism in order to maintain their power.
  
  Basic psychology tells us that their willingness to dissociate themselves from the maintenance of Capitalism was not based on love but on hate - Fear is the motive that drives you to love (associate) others or hate (dissociate) others and it is always driven by the situation that causes the fear.
  
  The elites were so afraid of losing power that they usurped the system of Capitalism which was their path to power. As Vladimir Lenin stated, "Contracts are made to be broken".
hanno achenbach Jan 28, 2015

Why should one take martin Wolf seriously?
- Nikolas Papavlassopulos Jan 29, 2015
  
  Because he understands economics and you do not?
- Nikolas Papavlassopulos Jan 29, 2015
  
  Because he understands economics and you do not?