If you don't believe me...

23
07
09

If you don't believe me...

tagged with:

...then maybe you'll believe a published economist. Prof Steve Horowitz explains exactly what I have been trying to explain about the causes of the housing and debt bubble and thus the current recession. Or watch it here:

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Comments

Submitted by DBC Reed (not verified) on July 24, 2009 - 08:30.

Don't get this guy at all.If the lousay faire market, as he call it, is so bleedin wonderful how come there are so many people without health cover in the US that Obama is poised to socialise medicine? (He makes dark hints that this would be unconstitutional.and would be challenged legally)

Similarly ,if everything was so so wonderful in Smugtown where he comes from,how was it that lousay faire did n't fix up those Hispanics he takes particular exception to with houses they could afford and that it needed federal action to stop mortgage red-lining?

He appears to believe in some economic Gaeia (spelling?)mechanism that produces a perfect equilibrium-but not at a level that sustains human life (at least with houses and medicine)

Submitted by Jock on July 24, 2009 - 08:59.

The main point of posting the video was for his explanation of the credit crunch - that it started with politicians trying to interfere in the market by setting interest rates below the market would naturally discover and by demanding banks lend at greater risk than they would normally accept.

All the instruments and so on which people are blaming for the credit crunch as an example of bankers' profligacy are all down to these signals sent out by politicians and them trying to find ways of mitigating the increased risks.

However, as regards medical care for example, we do not have a laissez-faire market, and nor does the US. The government creates all sorts of hurdles and barriers to entry - not just for medical personnel and facilities but for the HMOs and other insurance companies that prevents open competition and increases costs.

As an Austrian of course he does not believe in things like LVT, but also does not believe in things like zoning and the added expense that government imposes on building a home by licensing tradesmen and so on. I get the impression, though am currently working on a counter-argument, that Austrians believe that in the absense of all these extra costs housing would be affordable.

But as I say - the main point was his explanation of the proximate causes of the credit crunch, which follows what I have been saying for the best part of two years now and which corroborates Eddie George's statements to the Treasury Select Committee in March 07.

Does it make me an Austrian because I have found that the Austrians seem to be explaining the crunch the same way as I have, without knowing it was an Austrian position?

Submitted by DBC Reed (not verified) on July 24, 2009 - 13:01.

His explanation of how the banks were nudged even directed into these disastrous courses is unexceptionable (but would surely be better explained by a Georgist reading of the events).

It is all the right-wing crap that he attached to his not exactly groundbreaking insight (can insights break ground?) that get on your nerves.

BTW the latest Renegade Economist with Michael Hudson in New York is more up land tax street.