Visualizzazione post con etichetta arnold kling not what they had in mind. Mostra tutti i post
Visualizzazione post con etichetta arnold kling not what they had in mind. Mostra tutti i post

martedì 31 maggio 2016

Onda Verde: viaggiare informati (ma non troppo)

In autostrada c’è stato un incidente, cominciano a formarsi delle code, si procede a rilento fino al blocco del traffico.
Esiste un’alternativa: uscire dall’autostrada e imboccare la statale.
L’Onda Verde riceve la segnalazione e deve divulgare la notizia.
Dire semplicemente come stanno le cose è controproducente per la circolazione: tutti uscirebbero dall’autostrada intasando la statale con effetti ancor più gravosi.
Da un rapido calcolo dei flussi si deduce che il rapporto ottimale tra chi resta e chi esce è di 60/40. Come comunicare la notizia per produrre questo esito?
Ci vorrebbe un mago della linguistica, ma che sia anche un mago della psicologia applicata, ma che conosca intimamente la cultura locale. Ci vorrebbero molte cose per elaborare il messaggio più idoneo. Si fa quel che si puo’.
Di certo non si puo’ dire papale papale che “l’autostrada è bloccata”, come in realtà è: si otterrebbe – almeno in un paese dalla cultura piuttosto ingenua - un rapporto disastroso di 0/100, che manderebbe in tilt la circolazione complessiva.
Si dovrebbe provare allora con messaggi più sfumati del tipo: “causa incidente si procede a rilento sull’autostrada nel tratto…”. Oppure un ancor più ambiguo: “code causa incidente all’altezza…”. In alternativa si potrebbe dare un chilometraggio ad hoc della coda calibrato per ottenere l’agognato 60/40. Di sicuro l’esperienza passata aiuterà a mettere insieme il messaggio generico al punto giusto. Sì, ecco: più dell’algoritmo puo’ l’esperienza e gli errori passati.
Una cosa è certa: il messaggio ottimale produrrà il rapporto 60/40 senza far perdere all’ Onda Verde quella autorevolezza necessaria per gestire analoghi problemi che senz’altro si presenteranno a breve.
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L’enigma affrontato dall’Onda Verde mette in luce quanto in una società ben ordinata sia importante l’ambiguità delle parole.
I “principi” servono anche a questo: sono una valida alternativa alla precisione chirurgica della regola mirata.
I “principi” sono regole molto vaghe. Sono comandi in cerca di una situazione concreta in cui incarnarsi. Finché non vengono specificati suonano talmente bene da poter essere sottoscritti da tutti in buona fede. Il legame tra principio e regola è molto lasco e dipende dall’interpretazione contingente. I principi non sono mai mirati ma consentono il lusso di aggiustare continuamente il tiro.
Molti si lamentano della nostra legislazione, si dice che sia scritta male, che sia confusa, labirintica e chi più ne ha più ne metta. Molto spesso questa situazione caotica è il frutto di buone intenzioni: in nome della certezza del diritto si desidera essere precisi senza lasciar nulla al caso, si desidera costruire un edificio coerente nei minimi particolari. Ma spesso essere precisi è controproducente e ci precipita in un caleidoscopio nel quale si perde l’orientamento.
A volte, solo a posteriori noi sappiamo chi sono i buoni e i cattivi, cosicché, in teoria, la cosa migliore è fissare le regole solo a posteriori. Ma poiché un’operazione del genere suonerebbe arbitraria, si fissano dei “principi” a priori per rinviare a dopo la loro interpretazione concreta. In questo modo avremo dei “principi” incontestabili e delle interpretazioni non del tutto arbitrarie. Un simile paradigma richiede che il giudice finale sia anche un po’ legislatore, ma questa non è una stranezza della storia: in passato, specie nei paesi di common law il giudice era di fatto il legislatore della nazione.
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Quando il “principio” funziona meglio della “regola”?
Il governante affronta due problemi differenti. Ci sono i “problemi algoritmici”: per quanto ostici hanno una soluzione chiara e ben definita, basta applicare l’algoritmo corretto per scovarla. In questo caso lo strumento della “regola” s’impone come il più efficiente.
Poi ci sono poi i “problemi scacchistici”: qui il governante interagisce con il governato, una legge all’apparenza ottima viene successivamente degradata dalla reazione del governato cosicché necessita di una revisione, e così via all’infinito. In casi del genere lo strumento del “principio” è il migliore per uscire dal gioco di specchi.
Ma qui è meglio fare un paio di esempi.
L’evasione, per esempio, è un problema scacchistico: dare delle regole precise produce elusione, ovvero evasione legalizzata. Per riparare, piuttosto che invischiarsi in una legislazione bizantina e soffocante, meglio allora ricorrere a principi generici come per esempio quello dell’ “abuso del diritto”: nel momento in cui riconosco l’evasore, grazie a questo principio, lo condanno senza bisogno di dimostrare – cosa impossibile - che abbia violato una regola specifica e pre-determinata.
Un altro esempio di problema scacchistico è quello legato al “capital requirements” nel settore bancario: quante riserve devo detenere io banca per fare certe operazioni a rischio sul mercato aperto? In altre parole: quanto puo’ esporsi una banca? Una caterva di regole cercano di risolvere questo problema senza ingessare il sistema ma di solito le regole date dopo aver sperimentato una crisi di sistema sono solo i semi della crisi successiva. Gran parte dei disastri finanziari recenti derivano dal tentativo di eludere i vincoli dettagliati stabiliti per rimediare a squilibri passati da un regolatore che si credeva certosino. Con la normativa di Basilea, per esempio, il regolatore pignolo si addentrava nella giungla dei titoli azionari/obbligazionari per stabilire caratteristiche e rischiosità annessa, cosicché gli operatori, sempre pronti a reagire, s’inventarono la costruzione in laboratorio di contorti titoli assicurativi in grado di guadagnare punti nella meticolosa tassonomia del rischio. In poche parole: i titoli tossici nascono anche e soprattutto dagli accordi di Basilea. Ebbene, anche qui, perché non ricorrere ai “principi” anziché alle “regole certosine”.
Altre storie in Hard to Break or Easy to Fix? di Arnold Kling

lunedì 30 maggio 2016

Not What They Had in Mind: A History of Policies that Produced the Financial Crisis of 2008 by Arnold S. Kling

Not What They Had in Mind: A History of Policies that Produced the Financial Crisis of 2008 by Arnold S. Kling
You have 88 highlighted passages
You have 84 notes
Last annotated on May 30, 2016
EXECUTIVE SUMMARYRead more at location 20
Note: SOMM@@@@@@@@@@@@ Edit
The severity of the current crisis raises many questions about its root causes. Any attempt to understand these root causes, however, requires the placement of policies and regulations in the appropriate context.Read more at location 23
Note: CAUSE Edit
bad bets, excessive leverage, domino effects, and 21st-century bank runs.Read more at location 25
Note: 5 FATTORI Edit
housing policy, capital regulations for banks, industry structure and competition, autonomous financial innovation, and monetary policy—Read more at location 26
Note: SETTORI Edit
the paper concludes that bank capital regulations were the most important causal factor in the crisisRead more at location 28
Note: BANK CAPITAL REGULATION Edit
policy “solutions” to previous financial and economic crises sowed the seeds for this current crisis.Read more at location 29
Note: I RIMEDI PRECEDENTI CAUSE FUTURE Edit
Without this evolutionary history, there will be no meaningful lessons for today's policy makers.Read more at location 31
Note: STORIA DELLE REGOLE Edit
the actions of policy makers and regulators contribute to financial fragility,Read more at location 32
Note: REGOLE E FRAGILITÀ Edit
“Those who cannot remember the past are condemned to repeat it.” —George SantayanaRead more at location 38
Note: IL RUOLO DELLA STORIA Edit
1. INTRODUCTIONRead more at location 40
Note: INTRO@@@@@@@@@@@@@@@@@ Edit
those who only remember the headlines of 2008 will fail to heed Santayana's warning.Read more at location 45
Note: I TITOLI SVIANTI SUI GIORNALI Edit
For the roots of the crisis go back many decades, and if we are to avoid repetition, we have to fully understand the contextRead more at location 46
Note: IL CONTESTO Edit
As this paper will illustrate, the seeds for much of the current crisis were sown in the policy “solutions” to previous financial and economic crises.Read more at location 47
Note: LE TOPPE PEGGIO DEL BUCO Edit
illusions that key participants held during the years that preceded the meltdown.Read more at location 51
Note: ILLUSIONI Edit
Financial executives had excessive confidence in mathematical models of risk,Read more at location 52
Note: MODELLI MATEMATICI DEL RISCHIO Edit
the fact that regulators themselves encouraged the reliance on agency ratings, particularly for compliance with bank capital requirements.Read more at location 55
Note: AGENZIE DI RATINGS. IL REGOLATORE LE HA SOPRAVVALUTATE Edit
impetus to use agency ratings dates back to the 1930s, was reinforced in the 1970s, and was significantly enhanced as recently as January 1, 2002.Read more at location 56
Note: L EVOLUZIONE Edit
Regulators, too, placed too much confidence in financial engineering. Regulators, too, thought that the dispersal of risk into the “shadow banking system” helped make the core financial system safer. Regulators, too, thought that securitization was a superior form of mortgage finance.Read more at location 60
Note: REGULATOR TOO... Edit
policy areas:   housing policy; capital regulation for banks; industry structure and competition; autonomous financial innovation (not driven by capital regulation); and monetary policy.Read more at location 68
Note: AREE RILEVANTI Edit
2. A FRAMEWORK FOR UNDERSTANDING THE FINANCIAL CRISISRead more at location 73
Note: 1@@@@@@@@@@@@@@ Edit
four components:   bad bets; excessive leverage; domino effects; and 21st-century bank runs.Read more at location 74
Note: LE 4 CAUSE Edit
2.A. Bad BetsRead more at location 77
Note: TITOLO Edit
Bad bets were the investment decisions that individuals and firms made that they later came to regret.Read more at location 78
Note: DEFINZIONI Edit
housing bubble. When consumers in 2005 through 2007 purchased houses primarily on the expectation that prices would rise, those investments turned out to be bad bets.Read more at location 79
Note: BOLLA Edit
One way to estimate the significance of bad bets is to estimate the loss in the value of owner-occupied housing. The peak value was roughly $22 trillion, and if house prices declined by 25 percent, this is roughly a $5 trillion loss.Read more at location 83
Note: QUANTIFICARE Edit
2.B. Excessive LeverageRead more at location 86
Note: TITOLO Edit
Banks and other financial institutions took on significant risks without commensurate capital reserves.Read more at location 87
Note: RISERVE Edit
2.C. Domino EffectsRead more at location 94
Note: TITOLO Edit
Domino effects are the connections in the financial system that made it difficult to confine the crisis to only those firms that had made bad bets.Read more at location 94
Note: DEFINIZIONE Edit
professionals had been aware for months that Lehman was in difficulty, and keeping a large position in Lehman debt can be viewed as making a bet that the government would treat Lehman as “too big to fail.”Read more at location 99
Note: SCOMMETTERE SUL TOO BIG TO FAIL Edit
Another domino effect potentially comes from sales of hard-to-value assets.Read more at location 101
Note: VENDITE D URGENZA Edit
2.D. 21st-Century Bank RunsRead more at location 109
Note: TITOLO Edit
In a traditional bank run, depositors who wait to withdraw their money from an uninsured bank might find that the bank is out of funds by the time they reach the teller. That creates an incentive for a depositor to run to the bank so as to be the first in line—hence a bank run. By 21st-century bank runs, I mean the financial stress created by situations in which the first creditor that attempts to liquidate its claim has an advantage over creditors that wait.Read more at location 110
Note: DEFINIZIONE Edit
2.E. The Four Elements TogetherRead more at location 141
Note: TITOLO Edit
Without the bad bets, financial institutions would not have come under stress. Without the excess leverage, the bad bets would not have caused a financial crisis.5 Without the potential domino effects and the 21st-century bank runs, policy makers in 2008 would have been less frustratedRead more at location 142
Note: EFFETTO MIX Edit
The ideal objective might be to prevent domino effects and bank runs without forcing taxpayers to absorb losses from bad bets.Read more at location 148
Note: L IDEALE Edit
As a result of the bailouts and other policies, we presumably did not observe the worst of what might have happened had the domino effects and bank runs been allowed to play out. It is impossible to know exactly how serious the consequences would have been had those phenomena proceeded unchecked.Read more at location 151
Note: IL NN VISTO Edit
The regulatory response was focused on loss of confidence. The Federal Reserve and the Treasury placed more importance on loss of confidence than on bad decisions.Read more at location 157
Note: BAD DECISION VS LOSS CONFIDENCE Edit
In general, if you ask the CEO of a failed business what caused the failure, the CEO will cite loss of confidence rather than bad decisions.Read more at location 161
Note: SE CHIEDI AL CEO Edit
The founder of a startup that burned through all of its cash will argue that he was making great progress until his investors lost their nerve.Read more at location 163
The evidence for bad decisions includes the large number of mortgage defaults and the large number of downgrades of mortgage securities. It also includes the fact that private hedge funds did not see much opportunity in picking up distressed assets.Read more at location 167
Note: BAD DECISION Edit
If loss of confidence was the primary problem, then the government's investments in banks ought to earn profits for the taxpayers.Read more at location 171
Note: CONTRIBUENTE SPECULATORE Edit
3. THE MATRIX OF CAUSAL FACTORSRead more at location 174
Note: 3@@@@@@@@@@@@@@@@@@ Edit
As stated earlier, the five policy areas are housing policy, capital regulation for banks, competitive boundaries in financial intermediation, response to financial innovation, and monetary policy. Below is a matrix that includes my weights on the importance of each of these factors relative to the column heading.Read more at location 176
Note: PESARE LE REGOLE Edit
FIGURE 1: POLICY IMPORTANCERead more at location 180
Note: MATRICE Edit
As this matrix conveys, capital regulations were the most important causal factor in the crisis. Capital regulations encouraged banks and other financial institutions to make bad bets, to finance those bets with excessive leverage, and to set up financial structures that were subject to domino effectsRead more at location 182
Note: PREVALE CAPITAL REGULATION Edit
Bad bets were caused primarily by capital regulations and by housing policy. As will be explained below, capital regulations distorted mortgage finance away from traditional lending and toward securitization.Read more at location 184
Note: CR E BAD BETS Edit
Another contributor to bad bets was housing policy. Housing policy consistently encouraged more home ownership and subsidized mortgage indebtedness.Read more at location 187
Note: HOUSING POLICY AND BAD BET Edit
bubbles took place at around the same time in many other countries, including the United Kingdom and Spain.Read more at location 190
Note: GB SPAGNA Edit
Thus, policy alone is not entirely responsible for the bad bets.Read more at location 191
Excess leverage should be blamed largely on the perverse nature of capital regulations. These regulations, which were supposed to constrain leverage, instead were implemented in ways that encouraged risk-taking.Read more at location 193
Note: LEVA E CR Edit
AIG Insurance, as a major seller of credit default swaps, was effectively writing insurance without being required to set aside either loss reserves or capital. Thus, every major financial institution was given the green light to pile on mortgage credit risk with very little capital.Read more at location 197
Regulators understood most of the reasons for the increase in leverage, but they did fail to appreciate some innovations. For example, it is unlikely that the Office of Thrift Supervision, which had nominal oversight of the AIG Insurance unit that sold credit default swaps, understood the nature of the leverage in AIG's positions. Thus, I give a low but non-zero weight to autonomous innovation in creating excess leverage.Read more at location 200
Note: REGOLATORI E INNOVAZIONE Edit
there are those who place a higher weight than I do on the monetary policy of the Federal Reserve. The argument is that the Fed kept short-term interest rates too low for too long,Read more at location 203
Note: POLITICA MONETARIA: TASSI TROPPO BASSI Edit
Financial engineers created collateralized debt obligations (CDOs), credit default swaps (CDSs), and other esoteric products largely to exploit opportunities for regulatory capital arbitrage.Read more at location 209
Note: CDO E CDS. SCOPO Edit
these financial instruments increased the financial interdependence and vulnerability to runs of the financial system.Read more at location 211
Note: INTERDIPENDENZA Edit
For domino effects and bank runs, intuition may suggest that a large role was played by changes to industry structure due to mergers, acquisitions, and the erosion of boundaries between investment banking and commercial banking. The Obama Administration's white paper7 is among many analyses that stress the significance of the growth of the “shadow bankingRead more at location 212
Note: BANCHE COMMERCIALI E D INVESTIMENTO. SHADOW BANKING Edit
However, much of what is now called “shadow banking” emerged in response to capital regulations.Read more at location 217
Note: SHADOW E CR Edit
consider an alternate history where institutions had to maintain a strict, Glass-Steagall separation of commercial from investment banking, yet continued to operate under capital regulations that blessed securitization, off-balance-sheet financing, and other complex transactions. In that case, I believe that the crisis would have unfolded pretty much as it did.Read more at location 221
Note: IPOTESI DI MNDO SENZA STEAGALL Edit
CDOs, CDSs on mortgage securities, and SIVs are examples of innovations that took advantage of regulatory capital arbitrage. On the other hand, mortgage credit scoring is an example of what I call an autonomous innovation, meaning an innovation that was created for reasons other than regulatory capital arbitrage.Read more at location 224
Note: INNOVAZIONI ELUSIVE E AUTONOME Edit
4. PAST CRISES MAKE BAD POLICY: HOUSING POLICY AND CAPITAL REGULATIONRead more at location 229
Note: 4@@@@@@@@@@@LA CRISI SAVE & LOANS Edit
housing policy and bank regulatory policy evolved out of previous crises.Read more at location 230
The lesson is that financial regulation is not like a math problem, where, once you solve it the problem stays solved.Read more at location 231
Note: MATH PROBLEM CHESS PROBLEM Edit
This natural process of seeking to maximize profits places any regulatory regime under continual assault, so that over time the regime's ability to prevent crises degrades.Read more at location 235
When the Great Depression hit, the typical mortgage loan was a five-year balloon: The borrower paid interest only for five years, at which point the entire mortgage came due. The borrower either had to obtain a new loan or pay off the existing loan.Read more at location 237
Note: IL VECCHIO MUTUO. 5 ANNI Edit
the advent of the thirty-year, fixed-rate mortgage, promoted by new agencies,Read more at location 241
Note: L AVVENTO DEL MUTUO TRENTENNALE Edit
Because the savings and loans associations (S&Ls) were holding thirty-year, fixed-rate mortgages, their assets plummeted in value with rising inflation and interest rates.Read more at location 245
Note: INFLAZIONE E MUTUI TRENTENNALI. IL PRESTATORE FALLISCE Edit
Thus, the combination of thirty-year, fixed-rate mortgages and insured deposits, which were the solutions to the 1930s mortgage crisis, ended up producing the 1970s crisis.Read more at location 247
Note: IL 29 MUTUI 30ENNALI E DEPOSITI ASSICIRATI) PRODUCE LA CRISI DEL 1980. Edit
In the aftermath of the S&L crisis, policy makers drew three conclusions. One was that securitization of mortgages was better than traditional mortgage lending. The thinking was that pension funds, insurance companies, and other institutions with long-term liabilities were better positioned to bear the interest-rate risk associated with thirty-year, fixed-rate mortgagesRead more at location 260
Note: QUANDO PENSAVAMO ALLA CARTOLARIZZAZIONE COME ALLA SALVEZZA Edit
Another lesson of the S&L crisis was that regulators should not rely on book-value accounting.Read more at location 263
Note: CONTABILITÀ Edit
A final lesson of the S&L crisis was that capital requirements needed to be formal and based on risk.Read more at location 266
Note: CALCOLARE I RISCHI DELLE RISERVE Edit
The concept of risk-based capital was embedded in the Basel Accords in 1989,Read more at location 267
Note: BASILEA Edit
Thus, the regulators responded to the S&L crisis by promoting securitization, market-value accounting, and risk-based capital, all of which contributed to or exacerbated the most recent crisis. Mortgage securities became the “toxic assets” at the core of the crisis. Risk-based capital regulations promoted the use and abuse of these instruments. The combination of risk-based capital and market-value accounting served to exacerbate both the boom and the bust.Read more at location 269
Note: IL MERCATO SELVAGGIO IMBRIGLIATO Edit
Note: CRISI CHIAMA CRISI Edit
When a bank was forced to sell mortgage-backed securities, this lowered the market value of these securities, triggering write-downs at other banks under market-value accounting. This put other banks below the regulatory minimum for capital.Read more at location 274
Note: DOMINO Edit
5. HOUSING POLICYRead more at location 282
Note: 5@@@@@@@@@@@ Edit
11. EASY TO FIX VS. HARD TO BREAKRead more at location 856
Note: 11@@@@@@@@@@@ Edit
Instead, it may be more effective to aim for a system that is easy to fix than a system that is hard to break.Read more at location 857
Note: AGGIUSTARE O NN ROMPERE? Edit
This means trying to encourage financial structures that involve less debt, so that resolution of failures is less complicated. It also means trying to foster a set of small, diverse financial institutions.Read more at location 858
Note: DIVERSIFICAZIONE Edit
In the United States, tax policies tend to encourage debt financing.Read more at location 860
Note: FISCO E DEBITI Edit
Another way to make a financial system easy to fix would be to have small institutions with only weakly correlated risks.Read more at location 863
Note: PICCOLO E NN CORRELATO Edit
From the standpoint of making the regulatory system harder to break, it may make sense to have a neat regulatory organization chart, without gaps or overlaps. However, such a well-ordered regulatory system might result in a situation where all of the institutions performing a particular function, such as mortgage lending, fail together.Read more at location 866
Note: LA COERENZA DELLE REGOLE NN È SEMPRE UN BENE. DECENTRARE Edit
12. CONCLUSIONRead more at location 877
Note: 12@@@@@@@@@@ Edit
A number of regulatory developments helped to stimulate the boom in mortgage lending and securitization.Read more at location 878
Note: REGOLE CHE HANNO CONDOTTO ALLA CRISI Edit
The Basel Accord on risk-based capital set up crude risk buckets that initially favored Freddie Mac and Fannie Mae, because capital requirements were lower for mortgages securitized by the GSEs than for loans originated and held by banks.Read more at location 879
Note: BASILEA E LE TOSSICITÀ Edit
From the mid-1990s onward, the government pressured mortgage lenders to increase lending to low-income borrowers. Freddie Mac and Fannie Mae lowered credit underwriting standards considerably in response to this pressure, taking on significant subprime mortgage exposure in 2006 and 2007, just as house prices were poised to fall.Read more at location 883
Note: UNA CASA X TUTTI Edit
The incentives to hold AAA- and AA-rated assets stimulated various financial innovations that had unfortunate consequences. Among many examples, AIG insurance used credit default swaps on mortgage securities to “rent” its AAA rating to banks.Read more at location 886
Note: TUTTI ASSICURATI Edit
Monetary policy that was intended to stabilize inflation and employment kept interest rates low from 2002 through 2004, which contributed to the housing boom.Read more at location 887
Note: DENARO FACILE Edit
Regulators lacked the will and the ability to enforce competitive boundaries in the financial sector. These boundaries eroded over a forty-year period, primarily as a result of innovation but also as a result of regulatory decisions and legislation. Consequently, institutions became large and complex. These “too big to fail” firms posed major challenges to policy makers during the crisis, because they were subject to domino effects and 21st-century bank runs.Read more at location 889
Note: INCORAGGIATO IL TOO BIG TO FAIL