Re: the list and Minsky

["Rosser Jr, John Barkley" <rosserjb@xxxxxxx>]

    Of course this is a very good and serious question.
Certainly Keynes himself understood that there was such a
thing as measurable risk and that was not what he was
interested in.  That is indeed what is in CAPM and its
variations, generally with rather specific formulations of
the probability distribution involved.  These now even
allow for some "greater risk" in the form of leptokurtosis
which is undeniably in stock returns data.
     Doug has pinpointed where the issue is, that of the
effort of policymakers to avoid the serious breaks.  Having
saved the market in 1987 we now see Alan Greenspan getting
all bent out as he perceives an increasing bubble getting
out of control that might be very hard to stop the crash
of.  After all, check out what has happened in Japan since
the end of its "bubble economy."
     Keynes' point had to do with longer term trends and
developments.  Thus, a finecon type can create instruments
using CAPM that can deal with "normal" short-term risk.
But longer term trends can go sour.  The hot real estate
market of the 1970s and 80s went sour.  The stock market
was flat for a decade and a half.  The gen-Xers now buying
high flying stocks resent Greenspan, but if the market
tanks, they will be begging him to save their behinds.
     The price of copper 20 years out was JMK's canonical
example for fundamental uncertainty.  The same holds in
general for almost any series, even if one believes that
market capitalism as a system will persist in something
like its present form.  Alan Greenspan, nobody, can make
the markets go where they want them to in the long term.
Thus, it is not an accident that Keynes' most elaborate
discussion of these problems is in his GT chapter on
"Long-Term Expectation."
Barkley Rosser
On Fri, 7 Mar 1997 12:17:32 -0500 Doug Henwood
<dhenwood@xxxxxxxxx> wrote:


> At 5:33 AM -0600 10/2/17, ING. FELIPE BELLO wrote:
>
> >an environment with Keynesian
> >fundamental uncertainty.
>
> How much "fundamental uncertainty," which I take to mean something deeply
> systemic rather than the quantifiable risk of the CAPM, is there for First
> World investors? In the U.S., we've had bailouts for the S&Ls and "Mexico,"
> which really means Mexico's U.S. creditors. (As Penny Ciancanelli says, the
> First World gets Minsky bailouts, and the Third gets Fisher deflations.)
> There were huge state bailouts in Scandinavia and elsewhere in the late
> 1980s and early 1990s. Where is this "fundamental uncertainty"?
>
> Doug
>
> --
>
> Doug Henwood
> Left Business Observer
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>
>

--
Rosser Jr, John Barkley
rosserjb@xxxxxxx