Monday, July 6, 2009

Cowen on the Economy

If questions and anxieties about the current state of the economy are something you know a thing or two about, might I suggest that you read a new bit on the Economist?

Tyler Cowen, a well-known economist and co-author of one of my favorite blogs, marginal revolution, was asked a number of questions about the state of the economy. One of the questions asked:

"What has most surprised you about the current economic downturn?"

To which TC said:

"That it happened with such severity. As an economist I grew up reading and thinking about two formative events. The first was the crash of the real estate bubble in the late 1980s, preceded by the stock market crash in 1987. The second was the Third World debt crisis of the early and mid-1980s. Both were bad, but for the United States neither were like the last two years. I’ve never been a believer in any of the extreme forms of the efficient markets hypothesis, but those events made me overly complacent about how badly crashes and excess leverage can turn out. In the early 1980s I expected widespread insolvency for major U.S. banks and when they muddled through I ended up overrating their ability to do the same again."

Read the rest of it here.





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3 comments:

George said...

That's the crazy thing about this, that even world-renowned economists didn't see this coming.

Anonymous said...

yowsah!!

Nicki said...

What George says. I mean, if these guys don't know, what could the rest of us do?