[Pen-l] Re: Who saw the bubble coming: [...]

[Shane Taylor <shane.taylor@xxxxxxxxxxx>]

Laurent GUERBY singled out:

> 3. Non-critical acceptance of official data from BEA, BLS,
> Commerce led to only a passing familiarity with reality;

I think Barry Ritholtz's third point is the weakest. Say the problem where "garbage in, garbage out." Why did the likes of Dean Baker look over the same data and find the bubble?

I suspect the problem is one of processing. The profession took enough from Keynes to moderate some business cycles, but assumed away the fundamental instability of capitalism. Brad DeLong has said economic theory is crystallized history. Today's prevailing theory was founded in yesterday's tranquility. The anomaly of early postwar American capitalism was mistaken for the norm.

Shane

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