Subprime Reasoning

Subprime Reasoning on Housing is a title that says it all for the argument David Beckworth and Ramesh Ponnuru  put forward of tight money causing the 2008 Great Recession. Its a macro view that believes a little adjusting of interest rates which were at a historical low of 2% was going to turn around "The Big Short's" well described bubble of fraud saddling the nation's families with mortgages that were impossible to pay off.

As a side note, another case of subprime reasoning is Paul Krugman's "Passive-Aggressive Two Step" blog post regarding Milton Friedman and Anna Schwartz's criticism of the Federal Reserves inaction in The Monetary History of the United States.  Monetarist are critical of the Fed for not being the lender of last resort so that banks failed and money contracted with a downward spiral into complete depression during the years 1931-33, well after the 1929 crash and the asset deflation. Krugman's dogmatic perspective to explain the facts unfairly is beneath a scientist and a Nobel Laureate, remember Milton got his long before and for enduring work; not so for Krugman.

Greenspan let a Market Killing Machine Develop under his Watch

My response to Paul Krugman's comment that many influential, seemingly authoritative players, from Alan Greenspan on down, insisted not only that there was no bubble but that no bubble was even possible.


Former Federal Reserve Chairman Alan Greenspan was confident that the market would self regulate but his confidence was misplaced during the housing bubble when a grotesque concentration in banking developed because of the perception that the government would not let big banks fail. In other words, he betrayed his Ayn Rand Libertarian heritage by letting a market killing machine develop under his watch.