Tuesday, December 16, 2008

In plain sight...

This post has been simmering way too long, and I really should be heading to sleep but one needs to make progress in his or her craft. In this case it's a mention of the blogger over at Calculated Risk called Tanta aka Doris Dungey who recently passed away. It's a bit sad that while widely respected by many, she wasn't recognized when she as alive as witnessed by such memorial articles about the impact she had. Others have waxed more poetically and more eloquently about her analysis and expository talent and I will not add to the chorus, there's no need to. But the long and the short (no pun intended) of it is that she saw the financial bust before it bubbled to the surface in our current mess.

Instead, what interests me is that if you look at the timing of Tanta's posts, there were many years ago, and her analysis were not grounded in complex mathematical models (but it's clear she understood much of that) but in acknowledging what was in plain sight. Much of what led to this financial fiasco was well known, and I really don't buy that people didn't know what was going on. They actively chose not to know what was going on since there was quite honestly too much money to be made. Nothing is grander than a bubble, except when you forget the bubble is just that and start deluding yourself that it will go on forever. The key to being a great gambler is knowing when to walk away from the table. Everyone knows the odds are not in your favor.

Many people derided the posts of Tanta and others who said there was no housing bubble, that this time it's different. But it wasn't. So the question that begs me is who are the ones who have the environmental forecast nailed down, who say that we are in dire straits. Much of the signals are there, our pollution, or climate changes, the keeling curve. But so many people are saying, that it's just alarmists who are panicked. Despite the evidence, despite the common sense of the analysis, people still say that everything is ok. What scares me the most, is that the people who said there was no housing bubble are the same ones saying there's no environmental crisis. Funny how that works.


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