martedì 31 maggio 2016

CHAPTER 1 Progressives, Engineers, and Ecologists Foolproof by Greg Ip

CHAPTER 1 Progressives, Engineers, and EcologistsRead more at location 197
Note: 1@@@@@@@@@@@@@@ 1907: crisi di panico nelle banche di ny. 1910: mega incendio nel montana. fino ada allora due eventi del genere erano considerati regolari... il turning point la fed era già stata istifuita e smantellata due volte. l incendio doloso era pratica comune tra gli allevatori pinchot e th roosvelt ingngigantirono la prev sugli incendi. oggi sono ancora tra noi tesi: sono i successi che fanno maturare i disastri la riduzione degli incendi causò grandi accumuli di detriti nel sottobosco. x qs esistono gli incendi naturali che ripristinano un eq possibili cause della crisi 2008: 1 avidità 2 programmi governativi: casa x tutti 3 irrazionalità 4 falso senso di sicurezza indotti dai successi precedenti la paura ha un suo ruolo die scuole di psnsiero: 1 ingegneri 2 ecologisti 1 il mondo è un meccanismo: impariamo a manovearlo 2: il mondo è un organismo: i feedback sono imprevedibili x un intelligenza centrale progressive era: 1 in charge. economia: alfred marschall theodoe roosvelt wilson stato ismo walter bagehot fed: successi fino agli anno 20. pensiero: mai più crisi 1929. 2: troppo potere a 1… 1: troppo poco potere vincono due ingegnrri come hoover e roosvelt keynes: l economia è sentimento e il governo può governarlo rsvelt: tutti gli scapoli a spegnere incendi e costruire argini argini sicuri. più costruzioni sotto l argine. meno alluvioni piú dannose. gilbrrt withe meno incendi più boscaglia. incendi più rovinosi chicago: la gente si adatta alle regole e le neutrslizza. stigler peltzman lucas 70: stagflazione. trionfo di friedman. 2 in charge in 1 si salva solo ol banchiere centeale. sará minsky a dichiararne l inutilitá mm: il sistema fin sterilizza l azione della fed mm: in un sistema stabile la finanza diventa sempre più speculativa. la stabilità destabilizza imho: destabilizza un sistema stabile senza investimenti promettenti. ovvero un sistema stagnante iper regolamentato mm: le crisi sono sempre diverse il problema di mm: la sua teoria del ciclo nn è utile. in più era un catastrofista volker: il sistema ha bisogno di paura. un bel fallimento bancario Edit
In 1907 a terrifying panic swept New York’s financial marketsRead more at location 199
Note: INCENDI E BORSE CHE CROLLANO Edit
Three years later and thousands of miles to the west, massive forest fires broke out that burned across Montana,Read more at location 200
Until then, western settlers accepted fire and businesses accepted bank panics as the unavoidable by-products of a civilizationRead more at location 202
Note: L ERA DELLA RASSEGNAZIONE Edit
The two disasters marked a turning point in how Americans coped with chaos.Read more at location 204
more than a dozen distinct financial panics between its founding and 1907.Read more at location 205
There was available a solution: a central bank that could lend to banksRead more at location 206
Note: LA SOLUZIONE SEMPLICE Edit
Americans experimented twice with central banksRead more at location 207
The Panic of 1907 shifted opinion decisively the other way. “It is the duty of the United States to provide a means by which the periodic panics which shake the American Republic and do it enormous injury shall be stopped,”Read more at location 209
Note: 1907 Edit
The fires of 1910 similarly altered the country’s attitude toward natural disaster.Read more at location 221
Note: 1910 Edit
used fire to clear land for grazing.Read more at location 222
The logging industry wanted the trees for lumber; Theodore Roosevelt wanted them for national parks.Read more at location 223
Gifford Pinchot, a confidant of Roosevelt and the first chief of the U.S. Forest Service, wrote a few months after the fires: “Today we understand that forest fires are wholly within the control of men….Read more at location 225
Note: IL MITO DEL CONTROLLO Edit
He and his successors transformed the infant fire service into an organization devoted to preserving the woodsRead more at location 229
Note: NASCITA DEL POMPIERE Edit
A century later, panics and forest fires are still with us.Read more at location 231
Note: UN SECOLO DOPO Edit
Does this mean central bankers and forest managers were failures?Read more at location 234
Note: FALLIMENTO? Edit
Yet it was that very success that planted the seeds for future disaster and that illustrates the fundamental contradiction in humanity’s quest for safety and stability:Read more at location 235
Note: NO: SUCCESSO. È IL SUCCESSO CHE... Edit
offsetting behaviorRead more at location 237
In the case of forests, putting out small fires makes large fires more devastating, since fire suppression allows more leaves, brush, and other dead tree matter to accumulate on the forest floor, leading to denser forests.Read more at location 240
Note: LA VIRTÙ DEL PICCOLO INCENDIO Edit
the natural tendency of the landscape to immolate.Read more at location 246
The ferocity of fires in recent decades is the consequence of a warming climate combined with the fuel provided by forest density that has been allowed to develop over decades of fire suppression.Read more at location 246
Note: DENSITÀ DELLA FORESTA Edit
As for the economy, there is no shortage of theories about what produced the crisis of 2008. One popular culprit is private greedRead more at location 247
Note: FALSI COLPEVOLI DELLA CRISI: L AVIDITÀ... GOVERNO... ISTERIA Edit
Another is government: pursuing a vision of home ownership for all,Read more at location 249
Or maybe the crisis was the result of one of the mass obsessions that periodically sweeps the population, from tulip bulbs in seventeenth-century Holland to Internet stocks in twentieth-century America.Read more at location 250
the most important factor was the sense of safety that resulted from years of successfully fighting crisis and recession. The twenty-five years before the global financial crisis were unusually peacefulRead more at location 253
Note: IL VERO COLPEVOLE: IL SENSO DI SICUREZZA Edit
the “Great Moderation,”Read more at location 256
choking with the fuel of leverage, risk, and complacency.Read more at location 259
Note: GIOCA CON LA LEVA Edit
Fear serves a purpose: it keeps us out of trouble.Read more at location 262
Parents vacillate between walking their children to school every day to protect them from predators, and worrying they’ll grow up sheltered and unable to cope with life.Read more at location 263
Note: IL BIMBO PROTETTO Edit
two schools of thought. One, which I call the engineers,Read more at location 265
the other, which I call the ecologists,Read more at location 267
Note: INGENIERI VS ECOLOGISTI Edit
engineering’s rise began with the Progressive Era in the late nineteenthRead more at location 270
Alfred Marshall published his path-breaking Principles of Economics in 1890, but as Marshall noted, as a science it was “in its infancy.”Read more at location 274
Note: NGEGNIER MARSHALL Edit
Marshall made famous the supply and demand curves that every economics undergraduate today knows on sight.Read more at location 277
These tools persuaded experts that with enough study and will, the complexities of natureRead more at location 282
American Economic Association was founded in 1885, the Society of American Foresters in 1900, the American Sociological Association in 1905, and the American Planning Association in 1909.Read more at location 283
Note: PROGRESSIVE ERA Edit
revolt against Gilded Age capitalistRead more at location 286
excessRead more at location 287
Note: GILDED VS PROGRESSIVE Edit
Progressivism, the philosophy that government could be a force for both equity and efficiency.Read more at location 287
Theodore Roosevelt and Woodrow WilsonRead more at location 288
a more activist, muscular state.Read more at location 289
creation of a central bank modeled on those in England, France, and Germany.Read more at location 297
role of government sprung from social science.Read more at location 299
One of his influences was Walter Bagehot,Read more at location 301
professional administrators in government.Read more at location 302
The basic tools now existed for engineers to manage the economy: new regulatory powers, a central bank, even an income tax.Read more at location 312
Fed eagerly stepped forward to finance the federal government’s First World War effort.Read more at location 316
This worked well throughout the 1920s, and leading economists concluded that the problem of depression had been abolished.Read more at location 322
what caused the Great DepressionRead more at location 325
One theory that emerged in the early 1930s was that the engineers had overreached.Read more at location 326
adjustment to change.”Read more at location 330
Anything that remedied the Depression would interfereRead more at location 330
This ecological view was shared by Andrew Mellon, Herbert Hoover’s Treasury secretary.Read more at location 331
If ecologists like Hayek and Mellon accused engineers of doing too much, engineers believed they had done too little.Read more at location 335
Fisher, for instance, laid the blame for the Depression at the feet of the Fed, for allowing deflation to take hold.Read more at location 338
The Fed, he said, had to restore prices and end deflation through expansionary monetary policy.Read more at location 339
Herbert Hoover,Read more at location 341
He was a Republican who believed in letting market forces play out, but he was also, by profession and temperament, an engineer.Read more at location 341
Hoover thought Mellon meant well, but he dismissed his prescriptions and fought the Depression as best he could, for example setting up the Reconstruction Finance Corporation to lend to banksRead more at location 345
Franklin Roosevelt took office in 1933 and implemented a banking holiday, devalued the dollar against gold, and proceeded to overhaul the Fed and vastly expand the role of government.Read more at location 347
Government could make things much better, or much worse. This was the revolutionary insight of the British economist John Maynard Keynes.Read more at location 355
business investment as driven by “waves of optimistic and pessimistic sentiment.”Read more at location 357
If businesses were pessimistic enough, even interest rates of zero could not coax them to invest.Read more at location 358
Thus was born a role for the government:Read more at location 361
Franklin Roosevelt didn’t just expand the government’s responsibility for the economy: he also extended its oversight of nature. Since 1910, the Forest Service’s leaders were convinced that the only thing that kept them from controlling firesRead more at location 365
The Civilian Conservation Corps, one of the New Deal’s largest job creation programs,Read more at location 373
unmarried men to work planting trees and fighting forest fires.Read more at location 374
The Depression only strengthened the conviction that the rivers should be harnessed for economic benefit.Read more at location 380
Thus, at the end of the Second World War, the engineers had assumed responsibility for much of the environment and the economy.Read more at location 386
Within twenty years, though, fissures appeared in this new consensus. Neither the economy nor the natural world turned out to be as amenableRead more at location 390
Gilbert White,Read more at location 391
noticed that the frenzy of levee and dam building in the 1930s had not solved flooding;Read more at location 392
new problem: more homes, factories, and farms had sprung up on the floodplain,Read more at location 392
Starker Leopold,Read more at location 396
called for the reintroduction of fire as a device for habitat management,Read more at location 398
Controlled fire was “the most ‘natural’Read more at location 399
University of Chicago, argued that government management of the economy was backfiring by failing to consider how people would adapt.Read more at location 401
George Stigler argued that regulators often ended up serving the regulated, not consumers.Read more at location 402
Sam Peltzman made an even more audacious claim: regulations aimed at making consumers safer might be doing the opposite.Read more at location 403
“risk compensation,”Read more at location 405
“moral hazard”:Read more at location 406
Macroeconomic engineering faced a similar critique. Keynes’sRead more at location 408
In 1967 Milton Friedman predicted that as workers got used to higher inflation, they would demand higher wages — negating any additional demand for labor.Read more at location 411
By the 1970s, he was proved right as both unemployment and inflation rose,Read more at location 412
Friedrich Hayek’s star rose as Margaret Thatcher, Ronald Reagan,Read more at location 413
government meddling.Read more at location 413
But monetary engineering — tweaking interest rates just enough to keep both inflation and recession at bay — not only survived; it was more popular than ever. Paul Volcker, Alan Greenspan, and other central bankersRead more at location 418
unemployment and inflation steadily fell,Read more at location 420
Hyman MinskyRead more at location 423
he also thought Keynesian models gave short shrift to the financial system. They assumed that the central bank had full control of the money supply, credit, and interest rates.Read more at location 428
money and credit didn’t depend just on the central bank but on financial innovation.Read more at location 429
If, to control inflation, the Fed restricted the growth of lending by banks, then Wall Street’s innovators would come up with mechanisms to go around banksRead more at location 430
“hedge” stage,Read more at location 432
“speculative” phase,Read more at location 433
The longer the Fed prolongs prosperity, the further finance progresses through these stages, and the more unstable the financial system becomes.Read more at location 434
“Stability is destabilizing” sums up Minsky’s thesis.Read more at location 435
engineers’ efforts to control the economy would ultimately be self-defeatingRead more at location 436
Because the financial system is always evolving, “the next financial crisis will never be just like the last one.”Read more at location 439
His papers were more like essays, somewhat repetitiveRead more at location 443
Falkenstein, one of his teaching assistants and later a fund manager, recalls that his advanced classes were all classes in “Minskyism.”Read more at location 445
he preferred to tell stories of the great economistsRead more at location 446
Apart from being a difficult person, Minsky had another problem: his theory wasn’t very useful.Read more at location 450
Minskyism was antithetical to such elegant modelRead more at location 452
Confidence and credit would grow hand in hand, until some event caused them to break,Read more at location 453
When? Minsky didn’t knowRead more at location 454
“He always thought a market collapse was just around the corner,” Falkenstein recalled.Read more at location 455
Falkenstein sent his old mentor a letter, telling him, “I’m going to get rich off your theory!” Minsky was tickled.Read more at location 457
The fact was, however, that crises had come and gone while leaving surprisingly little mark on the economy.Read more at location 461
Markets had not been so turbulent since the 1930s, noted Paul Krugman, yet the economy had chugged along for seven years “without either turning into a runaway boom or stalling into a recession.”Read more at location 462
Volcker was a different matter.Read more at location 467
“I indeed think that the economy is becoming more crisis-prone,Read more at location 468
“What this country needs to shake us up and give us a little discipline is a good bank failure.Read more at location 470
it would be healthier if people were a bit more scared:Read more at location 472