History of the Current Crisis
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The European: How did you get into researching choice and decision making? Schwartz: For many years, I have been interested in the hold that the ideology of free market, economics has on people throughout the developed Western world. Why is it that everyone thinks that it’s a miracle of human intervention?
Barry Schwartz | Decision-making and Economics - The Paradox of Choice | The European Magazine
Economists have more to learn from the natural sciences if they are to claim a realistic model of human behaviour Y ou’ve come to a canteen for lunch: at one end of the counter, you see juicy fat burgers sizzling on a grill and, at the other end, healthy-looking salads. After a little hesitation, you choose the burger.
Nudge thyself - FT.com
How We Were All Misled by John Lanchester | The New York Review of Books
Most people with a special interest in the events of the credit crunch and the Great Recession that followed it have a private benchmark for the excesses that led up to the crash. These benchmarks are a rule of thumb, a rough measure of how far out of control things got; they are phenomena that at the time seemed normal but that in retrospect were a brightly flashing warning light. I came across mine in Iceland, talking to a waitress in a café in the summer of 2009, about eight months after the króna collapsed and the whole country effectively went bankrupt under the debts incurred by its overextended banks.
John Maynard Keynes, who never tried to conceal that he knew more than most people, also knew the limits to his knowledge. He wrote “about these matters – the prospect of a European war, the price of copper 20 years hence – there is no scientific basis on which to form any calculable probability whatever. We simply do not know.”
John Kay - A wise man knows one thing – the limits of his knowledge
The Book of Jobs | Politics | Vanity Fair
What this transition meant, however, is that jobs and livelihoods on the farm were being destroyed. Because of accelerating productivity, output was increasing faster than demand, and prices fell sharply. It was this, more than anything else, that led to rapidly declining incomes.
John Lanchester · The Art of Financial Disaster · LRB 15 December 2011
No essay in English has a better title than De Quincey’s ‘On Murder Considered as One of the Fine Arts’. I wonder whether, if he were alive today, he might be tempted to go back to the well and write a follow-up, ‘On Financial Disaster Considered as One of the Fine Arts’? The basic material might be less immediately captivating, but there’s a lot to choose from. As Warren Buffett has pointed out more than once, ‘It’s only when the tide goes out that you learn who’s been swimming naked.’ Financial and economic downturns always cause a rash of scandals and exposure. The tide has gone out – it’s still going out – and, frankly, it’s hard to know where to look.
Dec 7th 2011, 18:07 by R.A. | LONDON LOTS of people are currently trying very hard to figure out what's going to happen within the global economy over the next 1, 2, 5, and 10 years. It seems like the sort of thing one ought to be able to manage if one tries hard enough. It is, however, an impossible task (though some folks do have a talent for sketching out broad trends). I've been reminded of the futility of prognostication in doing a bit of research for a piece that will appear in the next print edition of The Economist .
The future: Expect the unexpected | The Economist
BBC News - Top economists reveal their graphs of 2011
Some of the world's top economists share their insights into the year's extraordinary financial developments, particularly in the eurozone, by choosing a graph which helps explain events so far and what lies ahead. The graphs and commentary form part of BBC Newsnight's review of the economic year.
Book Review: Why Nations Fail - WSJ.com
Far too much intellectual firepower regarding the global poor these days focuses on the (small) things Westerners can do to help—obsessing about, say, how much money to spend on mosquito-blocking bed nets to fight malaria. The bigger questions—about why some societies prosper and others don't, about how to improve the lot of an entire impoverished class—are left by default largely to uncritical admirers of China's growth. The arrival of "Why Nations Fail" is thus a hugely welcome event, since economists Daron Acemoglu and James A. Robinson take on the big questions and in doing so present a substantial alternative to the dominant thinking about global poverty. For Messrs.
I originally thought we were going to be talking about Wall Street today. But I got the sense from some of your book choices that one of the biggest offenders wasn’t based on Wall Street at all, but on Constitution Avenue in Washington DC. When you get bit by a dog, you don’t just look at the dog, you have to look at the owner who is holding the leash. To me, a lot of the regulatory changes, and a lot of what the Federal Reserve did, stand on their own as a major factor. But if you’ve read David Hume, if you’ve studied the philosophy of causation, you have to look at what motivated those changes. I have these debates with friends.
Barry Ritholtz on Causes of the Financial Crisis | FiveBooks | The Browser
It was the holy grail of investors. The Black-Scholes equation , brainchild of economists Fischer Black and Myron Scholes, provided a rational way to price a financial contract when it still had time to run. It was like buying or selling a bet on a horse, halfway through the race. It opened up a new world of ever more complex investments, blossoming into a gigantic global industry.