Jim Devine writes: >> this ignores the role of external costs: when Lehman Brothers bit the >> big one, it seems to have caused and instant deepening of the world >> financial crisis. Or maybe that's a good thing?
Because of the incredible complexity of the data, we can never know with certainty why the stock market and/or the economy did anything, thereby permitting economists and others to spend careers arguing with each other explaining historical data, In my humble opinion, the stock market crashed and the economy sank not because of what happened on September 13 and 14, 2008, but because of the misallocation of resources that occurred in 2003-2007. Bubbles always pop, which means that the resulitng mess is not proximately caused by whatever happened to be the needle, but what caused the bubble to expand in the first place. Interestingly, Lehman filed bankruptcy on September 15 and AIG was saved on September 16. Were subsequent events caused by the inaction re Lehman or the action re AIG? Did subsequent events even have anything to do with the government's decisions re Lehman or AIG? Since there is no real way to empirically answer the question, we all will presumably answer! the question in a way that supports our preexisting positions. David Shemano _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
