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The New York Times Published the Worst Economics Column Ever Written: Wednesday Hoisted from Other People's Archives from Six Years Ago

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It was, of course, by Ben Stein. As I see it, the New York Times owes every subscriber it sent this to a lifetime refund of all subscription monies they have paid:

The Worst Finance Column Ever Written: FOR decades now... I have been receiving letters from thoughtful readers... about the dangers of a secret government running the world, organized by the Trilateral Commission, or the Ford Foundation, or the Big Oil companies or, of course, world Jewry.... [T]he closest I have recently seen to such a world-running body would have to be a certain large investment bank... a gent in Florida who is sure economic disaster lies ahead (and he may be right, but he’s not), forwarded a newsletter from a highly placed economist at Goldman Sachs named Jan Hatzius....

Dr. Hatzius, who has a Ph.D. in economics from “Oggsford,” as they put it in “The Great Gatsby,” used a combination of theory, data, guesswork, extrapolation and what he recalls as history to reach the point that when highly leveraged institutions like banks lost money on subprime, they would cut back on lending to keep their capital ratios sound — and this would slow the economy. This would occur, he said, if the value of the assets that banks hold plunges so steeply that they have to consume their own capital to patch up losses. With those funds used to plug holes, banks’ reserves drop further. To keep reserves in accordance with regulatory requirements, banks then have to rein in lending. What all of this means — or so the argument goes — is that losses in subprime and elsewhere that are taken at banks ultimately boomerang back, in a highly multiplied and negative way, onto our economy. As the narrator in the rock legend “Spill the Wine” says, “This really blew my mind.”...

A few flaws in his paper... his hypothesis that home prices would fall an average of 15 percent nationwide (an event that has never happened since the Depression, although we surely could be headed in that direction), and that this would lead to a drastic increase in defaults and losses by lenders. This, as I see it, is a conclusion that is an estimation based upon a guess.... His document was mostly about selling fear. A spokesman for Goldman Sachs categorically denies this point and says that the firm’s economic research is held to the highest levels of objectivity and that its economists’ views are completely independent.... His paper is not really what I would call a serious overview.... It is more a call to be afraid... not [a review of] the lessons of history.... Goldman Sachs is a huge name in terms of moneymaking and prestige.... But it has never been clear to me exactly why its people are considered rocket scientists in any other area than making money. Dr. Hatzius’s paper is a prime example.... It... basically misses the point: yes, there are possible macro dangers, but you have to go all the way around Robin Hood’s barn to get to them.... Why, then, is his document circulating?... [It is] a selling document in the real Wall Street sense of selling — namely, selling short.... Goldman Sachs was injecting dangerous financial products into the world’s commercial bloodstream for years....

Is it possible that Dr. Hatzius’s paper was a device to help along the goal of success at bearish trades in this sector and in the market generally? His firm says his paper, like all of its economists’ work, was not written to support any larger short-trading strategy. But economists, like accountants, are artists. They have a tendency to paint what their patrons, who pay them, want to see.... Goldman has a fascinating culture. It is sort of like what I imagine the culture of the K.G.B. to be...

Why oh why can't we have a better press corps? Why did nobody at the New York Times lose their job over the hiring and persistent retention of Ben Stein?

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