Arnold Kling  

The M Word

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I have a new statistic to track--the use of the word "mortgage" in discussions of causes of the financial crisis. See, for example, my statistical report on Ben Bernanke's arm-breaking speech.

I predict the following:

The use of the M word will be highly correlated with ideology. Toward the right, the M word will be used a lot. Toward the left, the M word will be used less. Instead, we will hear lots of G words--global imbalances, Gramm-Leach-Bliley, greed, and so on.

The use of the M word will be highly correlated with opposition to bailouts. Those involved with the bailouts will avoid the term, or come up with euphemisms (remember "toxic assets"?).

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COMMENTS (3 to date)
ed writes:

"use of the M word will be highly correlated with opposition to bailouts"

Perhaps, but I wonder why this would be? Personally I am inclined to think the bailouts were a good idea AND to see lax lending standards and for mortgages and mortgage securitization as the biggest causes of the problem.

Steve Sailer writes:

Yes, history is being rewritten in front of our very eyes.

Max writes:

@ed: I don't think so, personally. I think lax lending standards are a huge portion of it. If it were a singular problem in the US, then I'd said you just did something wrong, but lending policies all over the world were like that. They were encouraged by the government (or its banks) to fullfill their promise on cheap housing for everybody.

I also don't think the bailouts as they stand are a good idea, because they are basically just infrastructure money that will do nothing in the short-term and will kick in when you don't need it anymore. And the worst of the bailouts was the Cash-for-Clunkers, because it was short-term and totally destroyed people's perception of a market and prices.

It is, if you will, totally against the idea of lean production and likely has created a big bull-whip effect through the production stages. It would have been better to have used limited contingents per month and thus spread the effect out over a year's time. Instead we had a huge demand in a few month and now we will have almost zero demand.

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