Russ Roberts on Capitol Hill

I'm not so sure I can even be that angry with Wall Street. What would have happened to a firm that did not lever up on highly rated fixed income securities (MBS) during a period of Fed easing? Would investors not have second-guessed them and made them pay for it?

What has less risk than MBS? Certainly not equity. Probably not any other form of non-government debt, either. Whatever sector Wall Street wound up investing in during the long period of easing would seem likely to have inflated as a bubble (in hindsight).

If you managed an investment bank, how would you have positioned yourself in the early part of this decade?

Arnold,
This is exactly my point in my commentary on your later post. How do we change people's minds? You assume (as I do) that Russ is correct. But if "econometric studies" do not change people's minds, what's the point? I am sure the Fed and Treasury do not think the street pick pocket metaphor is apt. Where is the evidence that can make one's opinion appear anything but political (meaning favoring certain groups in society)? Like a nut, I keep making this same point on economics blogs. How does one persuade people--voters--that ones economic views are accurate. If this is not even possible in principle--or close to that--one wonders why one should even have an opinion on such matters. I am stating it extremely, but not that extremely.