The Yo-Yos versus the Distavores. The HurriKeynes versus the Invisible Hands. And the team with more Monetary Madness appearances than any other — Stuff Happens. This was the scientific bracketology that determined the real cause of the Great Panic at the American Economic Association’s recent meetings:
(hat tip: David Warsh)
Among all the books, articles, and academic papers analyzing the financial meltdown, very few have pinpointed and exposed what I think was the accelerant that turned a problem into an all-out panic: namely, the zealous application of mark-to-market accounting beginning in the autumn of 2007. In this video, two of these very few — Brian Wesbury and Steve Forbes — discuss the meltdown, mark-to-market’s crucial role, and the stock market’s short and mid-term prospects. Wesbury and Forbes have also written two great books explaining the Great Panic, why it’s not as bad as you think, and how capitalism will save us.
Holman Jenkins today also picks up the theme of mark-to-market’s central role in the panic.
Maximum Entropy