Comments on: Weisberg FAIL

By: Feuding libertarians « Muse Free

Feuding libertarians « Muse Free — Mon, 17 Nov 2008 17:59:20 +0000

[...] perfect. He has, on multiple occasions, authored passionate defences of libertarianism such as this post from only a few weeks back. He has also written sentences like this: [If libertarianism is the [...]

By: Mr. Econotarian

Mr. Econotarian — Fri, 24 Oct 2008 01:50:05 +0000

I think ratings problem was the ignorance of systemic risk. CDOs came from trying to avoid random, occasional mortgage repayment and default risk. The CODs turned an anonymous risky mortgage into a less risky pool. The thought that the entire world of real estate might come crashing down and default rates rise to incredible levels were not addressed.

Ratings aren't magic crystal balls. If nuclear weapons were dropped on major cities in the US, you also would also expect systemic risk even on bonds from (pre-nuked) solid companies which are rated AAA. Of course, if you knew the nukes were in the air, you should not have rated them AAA…

The question is should Moody's have known “the nukes were in the air” regarding the housing bubble.

By: assman

assman — Fri, 24 Oct 2008 01:08:22 +0000

You should read http://www.fotuva.org/feynman/challenger-append... where Feynman describes very similar behavior leading to the Challenger disaster.

This type of behavior is not unusual. In fact it can get much worse. During the Tech bubble people actually believed in the ridiculous stories they came up with to justify stock valuations.

I think though that you can't just blame the rating agencies. The banks aren't stupid. They knew that the ratings didn't make sense. In fact I think a very large number of people have known for a very long time the ratings did not make sense. A lot of people where just fooling themselves and/or going along with the madness of the crowd.

By: Mr. Econotarian

Mr. Econotarian — Thu, 23 Oct 2008 18:50:05 +0000

The question is should Moody's have known “the nukes were in the air” regarding the housing bubble.

By: assman

assman — Thu, 23 Oct 2008 18:08:22 +0000

By: Jorge Landivar

Jorge Landivar — Wed, 22 Oct 2008 19:37:54 +0000

Sadly we've not fared as well on the economic front. A few small victories but not nearly enough….just look at the headlines.

Come now, free market ideas are now the norm instead of the exception to the norm, we have come a long way in the last 40 years,… we still have a long way to go however.

By: MarkySparky

MarkySparky — Wed, 22 Oct 2008 19:34:23 +0000

I've been a fan of Will for a few years, but the punt return paragraph has made me a confirmed groupie.

Plus, he's a fellow Iowan!

By: webgrrl

webgrrl — Wed, 22 Oct 2008 19:24:25 +0000

And from the testimony & documents released today about the rating agencies: the cow IM!

Incredible. In which two quants from Standard & Poors admit the ratings model is broken and that they don't want to rate an instrument. I suspect some gentlemen will spend quality time in jail for this. Look guys we're talking fraud here, I think. Not anyone's political philosophy.

By: GU

GU — Tue, 21 Oct 2008 19:47:37 +0000

Epic FAIL

By: GilM

GilM — Tue, 21 Oct 2008 17:14:11 +0000

Matt Welch made a pretty good reply to the Weisberg piece as well.