Robert Waldmann Barry Ritholtz argues that the problem with mortgages was underwriting standards and not securitization. He appeals to the very great authority of Monty Python. Click the link. Ritholtz seems not to be familiar with this new idea in economic theory called “Nash equilibrium”. Over -rated yes. Totally irrelevant not so much. One can […]

Pete Davis: Treasury Secretary Hank Paulson initially sold Congress in the fall of 2008 on emergency intervention to purchase “toxic assets,” but quickly reversed course in favor of direct capital injections. Those favored financial institutions revived more quickly than most thought possible and most of those injections have already been paid back. However, most of […]

This is taking longer than it should. For now, here is a “teaser” graphic, which I suspect is worth much more than 1,000 words: Meanwhile, other (mostly related) thing you may want to read: Brenda Rosser find that everything new is old again. Steve Randy Waldman tells the truth about banks, and Shames the Devil, […]

Robert Waldmann My effort immediately below to explain some general equilibrium theory in English didn’t work out so well. Here I will attempt to give simple examples which show how rational individual choice and/or trade between rational consenting adults can make everyone worse off. Models will all involve strange fruit trees, that is assets which […]

Robert Waldmann I’m not kidding. Someone in some thread said that he or she thought it would be great if I could give a simple intuitive explanation of Geanakoplos and Polemarchakis (1985). Also I would get an interesting perspective on the crisis if I could fly to the moon. I will try after the jump. […]