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I mean that doesn't really make him stand out; most economists will agree with the Big Short's account of the crisis. Except perhaps the coffee shop discussion
by VHRanger 9y ago
I mean that doesn't really make him stand out; most economists will agree with the Big Short's account of the crisis.
Except perhaps the coffee shop discussion at the end where Steve Carrell states banks did it because they expected to get bailed out (all evidence points that they didn't expect to get bailed out a priori and that they simply did it because shareholders and managers are greedy short sighted morons).
That said, Thaler is an excellent choice
- FabHK 9y agoWell, bankers did have an incentive to make bigger bets though, because on the upside they'd win more, and on the downside, well, who cares, the bank might go bust or be bailed out - it doesn't really matter, the downside (for the managers) is floored. Nobody has gone to jail, right. And then, to the extent that their assumption was that the payment system and economy does not collapse, it was predicated on a public bail out. Anat Admati, Stanford econ prof, has a popular book out, The Bankers' New Clothes that makes a case for much simpler and stricter bank regulation (basically, force them to hold much more capital (i.e. equity)), which makes a lot of sense to me.
- VHRanger 9y agoAgreed, bank managers need to face personal consequences for reckless behavior that has negative externalities on society. I'm personally in favor of criminal prosecution but I don't see that happening. Indeed I'm generally in favor of keeping banks large for returns to scale benefits, but the political perversion of large banks may offset that benefit
- nickik 9y agoYou will find a very large amount of economist who disagree with the idea that the stuff in Big Short caused the recession.