Comments on: Feldstein’s Foolishness

By: Vince

Vince — Sun, 05 Oct 2008 02:21:03 +0000

Feldstein’s proposal acknowledges that houses are overvalued. What he attempts to do is make the overvalued houses more affordable, so people don’t (or _can’t_) walk away from their homes.

On the plus side, it gives even people with underwater mortgages the ability to stay in their homes. On the other hand, most of these people should still walk away from their mortgages anyways.

By: Pat

Pat — Sun, 05 Oct 2008 02:18:44 +0000

I share Caveman’s reaction to the apparent willingness of most mainstream economists to sustain an artificial boom. But if I might advance an explanation (Which might be obvious), most mainstream economists (Not just them, but also even most laymen) would assume that they can control the economy. Maybe what we are saying is the last vestige of central planning (e.g.: Keynesian economics) mixed with a lip service to free market capitalism (Which I don’t need to remind was never fully implemented).

By: jomama

jomama — Sat, 04 Oct 2008 23:19:49 +0000

It’s harebrained all right.

But Washington is replete with the harebrained, ergo
expect it to be adopted.

By: David

David — Sat, 04 Oct 2008 10:26:23 +0000

My parents are under the belief that this bailout was necessary. Considering that my Dad works in government contracting for the military, you’d think that even he would understand the economic principles leading to this mess. Sadly, no. It turns out that most Americans who think they understand economics do so because they’ve handled dollars all their lives; they believe that their anecdotal experiences represent the rest of the economy. Marx was right; the processes of production and trade remain invisible to most people in this age we’re in. On top of that, most are either too lazy or busy to scrutinize these processes all the way to the mint.

By: Caveman (intellectually-speaking)

Caveman (intellectually-speaking) — Sat, 04 Oct 2008 09:27:43 +0000

It’s very strange that an economist can understand what caused the boom yet not accept that a bust inevitably follows. Feldstein and others seem to be of the opinion that it’s possible (via central bank or legislative machinations) to have either a never-ending boom or a boom followed by a brief plateau or minor contraction and then back to booming. Isn’t it obvious that this is a “Yes! You can have your cake and it too” kind of proposition? I’m not an economist and I’m rather new to Austrian theory, but it just seems like common sense that an irrational boom will always be followed by a painful bust. Why is it that Austrians understand this and so many mainstream economists don’t?

By: Renaud Fillieule

Renaud Fillieule — Sat, 04 Oct 2008 06:51:44 +0000

To be honest, Feldstein’s paper linked below is much better than his recent WSJ paper:

http://www.nber.org/feldstein/bis2008.pdf

He recognizes that the first of the “contributing causes to the current financial instability” is “The low federal funds interest rate early in the decade.”

By: Renaud Fillieule

Renaud Fillieule — Sat, 04 Oct 2008 06:37:01 +0000

“…the fundamental cause of the crisis: the downward spiral of house prices that devastates household wealth and destroys the capital of financial institutions that hold mortgages and mortgage-backed securities.”

Written by a Professor of economics at Harvard? U-n-b-e-l-i-e-v-a-b-l-e…

By: Robert

Robert — Sat, 04 Oct 2008 06:20:20 +0000

Can anyone explain the simple concept of time value of money to these clowns? How does adding more complexity (more computational factors) to an already moderately complex (as viewed by the “average person”) set of equations.

I think these clowns use every means available, including unnecessary complexity, to obfuscate terms that should be in the reach of any individual to understand. Tried reading a piece of legislation lately…give me a break!

The federal government is moving, as Madison said, to perpetrate “…more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations.” The long term unintended consequences of this latest abridegement of freedom should be obvious.

By: MattYoung

MattYoung — Sat, 04 Oct 2008 05:34:46 +0000

Well, being Reagan’s economic adviser he presided over a massive increase in the federal share of he economy. So, the guy is not as smart as we would expect from a well known economist.

By: William H. Stoddard

William H. Stoddard — Sat, 04 Oct 2008 05:31:48 +0000

This just cries out for a parody essay, perhaps discussing the desperate need for the Dutch government to step in and subsidize the purchase of tulips.