Saturday, October 04, 2008

Twelve steps to Armageddon

This NYU prof (a.k.a Dr. Doom) saw it coming, pretty well. Are we at step 12, already?
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5 comments:

Tecumseh said...

The audience seemed skeptical, even dismissive. As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, “I think perhaps we will need a stiff drink after that.”

Was that JJ, pushing his trademark ouzo?

10/04/2008 10:26 AM
Tecumseh said...

The dismal science, it seems, is an optimistic profession. Many economists, Roubini among them, argue that some of the optimism is built into the very machinery, the mathematics, of modern economic theory. Econometric models typically rely on the assumption that the near future is likely to be similar to the recent past, and thus it is rare that the models anticipate breaks in the economy. And if the models can’t foresee a relatively minor break like a recession, they have even more trouble modeling and predicting a major rupture like a full-blown financial crisis. Hmmm... We need an equation!

10/04/2008 10:37 AM
Tecumseh said...

More: This cannot continue for more than a few days. This is the economic equivalent to cardiac arrest. Then we debated what is necessary to restart the system. I believe that the government will do another Hail Mary pass, with massive guarantees to the short-term commercial credit system and wide open short-term lending by the Fed.

Ah, but that's precisely what JJ wants.
Dixit JJ (in a slightly different context): I disagree with Krauthammer about the number of Hail Marys one can throw in a game. I've seen Favre throw a lot of passes that to other QBs would have been Hail Marys and to him are just completions.

10/04/2008 10:51 AM
Arelcao Akleos said...

Perhaps economists should have not been so dismissive of the mathematics of bifurcations. Just because Thom's "Catastrophism" degenerated into a mini-cult in the 70s didn't mean that the essential insight wasn't spot on. Economists have a need for a mathematics whose models incorporate the possibility of abrupt and drastic change. Otherwise they locally linearize themselves, and us, into an economic deathtrap.
Oh, wait, mathematicians are the problem.... right.

10/04/2008 5:09 PM
Tecumseh said...

It's all JJ's fault: he wants to linearize everything. I told him not to, but noooo, he wouldn't listen.

10/04/2008 5:23 PM

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