October 11th, 2008


Нобелевский лауреат по экономике про "кризис, который устроил Билл"

написал заметку год назад ( в декабре 2007 в Wall Street Journal):

The Clinton Housing Bubble

The joint housing and mortgage-market crisis once again reminds us that all financial implosions stem from the same cause: borrowing short and lending long without enough equity to weather periodic storms in the gap between.

But this bubble was different. Besides being fueled by housing purchases and repackaged loans, each with inadequate equity -- doubling down with other people's money -- at the end of the capital-gains rainbow was the right to take up to $500,000 of profit, tax free.

Thank you President Bill Clinton for your 1997 action, applauded by the banks, the realtors and all citizens in search of half-millionaire status from an investment they could understand and self deceptively believe to be low risk; thank you for fueling the mother of all housing bubbles; thank you for enabling so many of us who bought second or third homes, and homes before construction began, which we then sold to someone else who dreamed of riches from owning homes long enough to sell to another fool.

Once again, try as we might and in spite of our political rhetoric, we have failed to help the poor in applauding government action intended to help ourselves.

The consumption binge is now over, and there is more than enough blame and souring loans to spread around. Congress, if its members can stop squabbling, wants desperately to sanctify it all with actions sure to launch at some future date the grandmother of all housing and mortgage-market bubbles. This august body has long forgotten that it set the stage for housing bubbles by creating those implicitly taxpayer-backed agencies, Fannie Mae and Freddie Mac, as housing lenders of last resort.

Financial market innovators who invented securitization as a mechanism for creating a liquid national market for mortgages are now criticized for having caused an "agency problem." This is jargon for management not having good incentives to provide investors with "truth in packaging" of the underlying economic risk. But what does truth matter at the height of a bubble? These critics would solve the agency problem with more government regulation. Excuse me, but does not the political process have the biggest agency problem of all?

The Federal Reserve, with a default-risk tiger by the tail, feels handcuffed by its accountability and responsibility for avoiding a cascade of defaults in the highest quality obligations, as well as the bad investments seeking an asymmetric tax-free profit. Shades of Long Term Capital, the Savings and Loan crisis, and heyday of the myth of Portfolio Insurance -- historical cases of borrowing short to lend for what may turn out to be longer than expected. They are all conditioned on the existence of liquidity for sellers that can dry up with frightening speed.

Consequently we have the "independent" Fed being driven by market forces to accommodate the long-evident and glaringly least-defensible features of the housing/mortgage markets. Moreover, the moment the Fed abandoned its stance against inflation, the dollar, gold, oil and commodity prices signaled inflation, and now two months later consumer prices have confirmed the signal.

More daring than the action to exempt real estate from the capital gains tax -- and in lasting service to the poor -- would have been actions allowing capital gains on all assets to go tax free, provided that the capital was reinvested -- i.e., not consumed, and yes, good citizens, housing counts as consumption.

Unlike the latest housing bubble, the stock market "excesses" of the 1990s financed thousands of new ventures, some of which found innovative ways to manage the proliferation of new technologies. The result: astonishing, long-term increases in productivity still evident in the most recent quarter.

Adam Smith in his "The Theory of Moral Sentiments" (1759) saw the subtle truth that consumption by the rich has little effect on the welfare of the poor. That's because the income of the rich is largely invested in the tools and knowledge of production, which provide future long-term value for everyone: "The rich only select from the heap what is most precious and agreeable . . . though they mean only their own conveniency . . . [and] . . . the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements."

Expenditures on housing construction are not "improvements" yielding increased productivity and future new wealth to be divided with the poor. They are more akin to satisfying government-subsidized vanity.

Mr. Smith, a professor of law and economics at George Mason University, is the 2002 Nobel Laureate in economics.

Минувшую неделю VERNON L. SMITH - опять же в WSJ - продолжил (после годичной паузы) рассуждения на все ту же растущей актуальности тему:

There's No Easy Way Out of the Bubble

Treasury doesn't know much about running a 'reverse auction.'

Since 2006 the U.S. economy has exhibited the features of a crash following a classic bubble.

But the bulge was not precipitated by general stock-market excesses nor by an economy-wide bubble-crash. The excesses were focused in the housing and related financial markets -- banks, mortgage, and insurance companies -- starting in 1998 and accelerating to 2006. This created the mother of all housing bubbles.


True, the crash has been exacerbated by the increase in oil prices, up from a mere $12 a barrel in 1998, to $90 in January 2008, then a spike to $147 in July. But the economy has rolled tolerably well under that punch, and it does not pose the systemic risk of the housing debacle.

Housing is one-third of all U.S. wealth, totaling $19.4 trillion in the second quarter of 2008, according to the Federal Reserve. Almost all of the mortgage debt on those assets will be paid. Only a subset of homes funded recently with low down payments at unsustainable prices are at risk. All of you who rent -- a respectable American tradition -- can look forward to buying more cheaply in the future. Take your time.

The housing disaster-in-motion was widely reported, complete with warnings, before the crash. But every word fell on deaf ears, because bubbles are never about reason, cool calculation and courageous politicians willing to risk defeat.

By 2005 Alan Greenspan and others were warning that Fannie Mae and Freddie Mac had become seriously undercapitalized and had persistently over-accumulated high risk mortgage paper. That paper was created by an industry reluctant to hold its own brainchild, but which responded to home buyers chasing an appreciating capital asset driven by their own ebullient expectations.

Moreover all parties have long believed that the obligations of Fan and Fred were backed by the Treasury's deep pockets -- that's you and me who pay taxes.

We need to minimize systemic and taxpayer risk. Fortunately the two are entwined. Serve the needs of the former and you protect the taxpayer.

Why is this crash a classic?

- A "liquidity crisis." In every market, there is ultimately only one source of liquidity: buyers. And this is what central bankers hope to see return when they speak euphemistically of "restoring confidence."

All other sources of liquidity are stop gaps, bridges, band aids, and now a duct-tape bailout. Every seller in dire need of a buyer is in a liquidity crisis, even if he is a gainfully employed homeowner whose job security requires a move, or a fundamentally solvent bank, holding secured mortgage paper, but in need of immediate cash. Both now find that yesterday's buyers are in hiding.

A sale is always an "expectations equilibrium" -- a buyer only accepts a seller's instrument (agrees to a sale) if she believes that others will also accept it. Disequilibrium bubble-crash principles have been intensively studied in laboratory environments for over two decades (see Jerry Bishop's article in The Wall Street Journal on my work in this field "Stock Market Experiment Suggests Inevitability of Booms and Busts," Nov. 17, 1987).

- During a bubble buyers are everywhere. Then, suddenly, they disappear, waiting, watching, delaying, reluctant to buy assets that others might not. That buyers will disappear in a bubble is predictable, what is never predictable is the timing. In his 1933 inaugural address, President Franklin Roosevelt said "the only thing we have to fear is fear itself." Yes, but the return of fearful buyers is just as unpredictable as the timing of their disappearance. And only the most arrogant will pretend to know what public policies will restore buyer "confidence."

- Cash is not scarce. Cash is just justifiably hard to loosen, and this makes it king. There are only three kinds of buyers in a downside housing/mortgage or equities market: those who buy too soon; the few who roll an 11 at the bottom; and those who are too spooked to buy until well after the crisis is over, if ever. Warren Buffet may be either too soon or about right. If he is too soon, it won't be his first time. The point is that no one can know.

Starting in 2007, the Fed under Ben Bernanke, did all the right things expected of a central banker facing liquidity problems in the finance/housing sector. He even risked inflation by making it easy for banks to borrow from each other and the Fed. (The dollar did temporarily fall as commodities spiked upward.) But the action failed to solve the problem.

The early evidence came when Countrywide crashed and burned last year. But as English economist Sir Dennis Robertson would have put it over 60 years ago, the Fed was "pushing on a string" that only buyers can pull. Further deterioration set in, and nothing terrorizes a central banker more.

Enter a bipartisan Keynesian-inspired Congress and administration, who authorized Treasury to write large numbers of small checks as part of a "stimulus" package to many people who do not pay taxes. People spent the money at Wal-Mart. Much of it went to China (which recycled it into U.S. bonds). And we saw a blip in retail sales that just delayed the inevitable.

So Mr. Bernanke took the only action left: He got Treasury Secretary Henry Paulson into the action. Better two scared leaders at the top than one. They went to Congress.

And the result was the House's "Emergency Economic Stabilization Act of 2008," a bureaucratic nightmare that fails to use auction markets in a way that will minimize both taxpayer and systemic risk. The key flawed provision states "The [Treasury] Secretary is authorized to purchase, and make and fund commitments to purchase, troubled assets from any financial institution as are determined by the Secretary."

Excuse me, did I read "any?"

The Senate spelled it out more clearly: "troubled assets are not limited to mortgage related assets but could include auto loans, credit card debt, student loans or any other paper related to commercial loans."

"Any other paper?" Heaven help us! Fortunately, Mr. Paulson still has some good sense. But no wonder the bailout bill is authorized at $700 billion. For a little perspective, consider that in August, MarketWatch reported that there are 4.67 million existing homes for sale, at a median price of $212,400 for a total of just under a trillion dollars. With a 30% loan, Treasury could buy them all.

Auction designers should immediately note that we are talking about a market with one buyer and many sellers of a hodge-podge of items. The mechanism that will be used is a "reverse auction" -- with sellers competitively submitting asking prices to sell Treasury a heterogeneous mix of good, some sour, apples and oranges whose content is better known to sellers than the Treasury.

Treasury expertise is in auctioning Treasury securities of a given maturity to multiple competing buyers: say $10 billion worth of six-month bills, or two-year notes. In either case every bill (or note) is identical to every other one. The only uncertainty is the final clearing price and Treasury is assured that it will get the best price.

Treasury has no expertise in this ridiculous new venture. (Auction houses such as Christie's and Sotheby's have no problem with heterogeneous items. They auction them singly or in small assemblies to multiple buyers, who assess the items and make bids that reflect best estimates of true value.)

Treasury action should focus on providing capital to individual banks and mortgage companies in return for debt, convertible bonds and equity and warrants to be negotiated. This is dangerous enough for the taxpayer, but here Mr. Paulson has previous experience. (The model was demonstrated recently when Treasury and the FDIC assisted J.P. Morgan's takeover of Washington Mutual.) Then let companies do any necessary piecemeal paper asset auctions, while Treasury holds managers accountable. This is feasible at least, if hardly risk-free for taxpayers.

This procedure will confront financial systemic risk, and allow prices to emerge competitively that will encourage the all important return of bargain hunting buyers.

Would the procedure work? I don't know. But it does focus on the knowledge that markets are capable of bringing to the table. The bailout does not.

To the extent that the bailout shores up existing home prices and its paper, it delays the inevitable. It does not assure the early return of buyers. Look at the course of home prices since 1987 in the nearby chart. Do you think the price decline has run its course since it turned the corner in 2006, then plummeted in 2007-2008?

Shoring up prices to prevent a further debasement of overly generous loans is not designed to bring back buyers of homes and mortgage paper. But there is good news: homes, stocks, crude oil, copper, corn, soy beans, wheat, lumber and even ethanol are now cheaper.

Mr. Smith, a professor of economics and law at Chapman University, received the Nobel Prize in economics in 2002.

Ссылки по теме:

Выруливает ли - и в сам деле - "финансовый кризис" на "тропу Энрон", или ...

... грозные об том заявление в Конгрессе носят характер театральных жестов?

Последний об том репортаж WSJ создает впечатление что видимо и на этот раз - как то случилось в предшествующий "рубежа веков" кризис - законодатели всерьез занялись поиском (на этот раз соответстветсвенно уже в финансовой индустрии) достаточно масштабной фигуры для совершения публичного акта ритуального заклания:

    A federal criminal probe under way since earlier this year is also looking at how candid company executives were with investors at a December 2007 investor conference and whether executives at AIG's financial-products unit, which sold derivatives contracts, misled AIG's outside auditor last fall.

    At congressional hearings Tuesday, a former internal AIG auditor wrote that he had early on raised concerns about being excluded from conversations about the valuation of the derivatives. The auditor, Joseph St. Denis, wrote in a letter to the House Committee on Oversight and Government Reform that in early September 2007, he learned that AIG's financial-products unit had been asked for billions of dollars in collateral related to derivatives it had sold.

    "I was gravely concerned about this," Mr. St. Denis wrote. The derivatives, known as credit-default swaps, protect buyers against the risk of default on other investments, and AIG believed the likelihood of making payouts was remote. Mr. St. Denis wrote that the valuation model of one of AIG's trading partners "apparently indicated" that, in fact, the unit "was in a potentially material liability position."

    Mr. St. Denis wrote he wasn't personally involved in the valuation of the swaps at the unit. In the last week of September 2007, Mr. St. Denis wrote, the unit's head, Joseph Cassano, said he had "deliberately excluded" Mr. St. Denis "because I was concerned that you would pollute the process."

    In the letter, Mr. St. Denis said he resigned on Oct. 1, 2007, and that later that month, AIG's chief auditor, Michael Roemer, asked him why and said he would report those reasons to AIG's audit committee. Mr. St. Denis wrote that he told Mr. Roemer about Mr. Cassano's comment. That would indicate that a key AIG executive last fall was aware of Mr. St. Denis's concerns.

    Documents Show AIG Knew Of Problems With Valuations OCTOBER 11, 2008

Накапливающийся в стране гнев - особенно жарко видимо полыхнувший по поводу дискуссий в Конгрессе относительно бэйлаута в 700 млрд - должен быть потому как своевременно канализован в эмоционально убедительное для "масс трудового народа" русло "открытого судебного процесса над виновниками этих безобразий"(с).

Сделать это видимо в очередной раз надо будет - по давно сложившемуся для таких ситуация обыкновению - согласованно Конгрессу и исполнительной власти, не дожидаясь пока набирающий температуру "низовой огонь политических страстей" спонтанно - неплановым образом - пробьет какую либо опорную стенку из базовых для каркаса социальной системы страны "несущих конструкций" ...

Поиски выхода из финансового кризиса: "кадры решают всё!"

Обозначилась кажется что первая практически реализуемая процедура употребления сотен миллиардов долларов, которые Конгресс выделил команде "Поулсон и Ко" для тушения пожара мирового экономического кризиса непосредственно в точке его "возгорания" - в ведущих учреждениях финансовой индустрии США.

Если правильно понимаю относящиеся к тому сообщения последних дней то правительство начнет напрямую подпитывать кэшем падающие банки и пр. финансовые учреждения, приобретая для того их акции...

Кроме прочего, это означает начало масштабного процесса сращивания государственного и частного сектора в финансовой индустрии.

Как и всегда в таких случаях крайне трудно - если и вообще - понять стороннему наблюдателю, что именно происходит.

В самом ли деле, как то было объявлено, государство "частично национализирует" крупнейшие частные предприятия одного из важнейших секторов хозяйственного механизма страны, или ... все ровно наоброт:

private sector aquires the piblic sector

Автору вышеприведенной картинки по-видимому ближе растущей популярности версия событий, согласно которой этот как раз лидеры финансовой индустрии, пользуясь всеобщим смятением охваченного паникой перед грядущими бедствиями населения, приняли решение "частично приватизировать" государственный механизм, получая таким образом уже по сути прямой доступ к заветному "печатному станку".

Однако в данном случае по-видимому это не так уж и важно пытаться непременно доподлинно установить кто именно из слившихся в экстазе взаимного обладания кого имеет, потому что в любом случае имеет место все тот же - ранее тут уже ни раз в контексте данной теме отмечавшийся - подход к решению очередной социально острой проблемы: "от чего заболел, тем и лечись":

    From 1938 to 1968, the secondary mortgage market in the United States was monopolized by the Federal National Mortgage Association (Fannie Mae), which was a government agency during that period. In 1968, to help balance the federal budget, part of Fannie Mae was converted to a private corporation. To provide competition in the secondary mortgage market, and to end Fannie Mae's monopoly, Congress chartered Freddie Mac as a private corporation.

    The Emergency Home Finance Act of 1970 created Freddie Mac. The goal was to create a secondary market for conventional mortgages, as indicated in the Fannie Mae charter.

    The Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA") of 1989 revised and standardized the regulatory mechanisms for both Fannie Mae and Freddie Mac. Prior to that, Freddie Mac was owned by the Federal Home Loan Bank System and its member thrifts and governed by the Federal Home Loan Bank Board which was later reorganized into the Office of Thrift Supervision. FIRREA severed Freddie Mac's ties to the Federal Home Loan Bank System, created an 18-member board of directors to run Freddie Mac, and subjected it to HUD oversight.

    In 1995, Freddie Mac began receiving affordable housing credit for buying subprime securities.

    Freddie Mac was put under a conservatorship of the U.S. Federal government on Sunday, September 7, 2008: Federal takeover of Fannie Mae and Freddie Mac.


Рузвельт выступил в 1938 году с социально привлекательной идеей помогать малоимущим слоям населения покупать дома, выделив на такое благородное дело разумно ограниченную часть госбюджета. Под это дело было создано государственное учреждение - Federal National Mortgage Association (Fannie Mae).

На рубеже 70-х меж тем бюджет трещал под тяжестью войны во Вьетнаме и масштабных проектов Линдона Джонсона по общей того времени популистской программе демпартии "Великое Общество". Поэтому Джонсон придумал хитрый ход, как вывести этот самый Fannie Mae из расходной части бюджета (In 1968, to help balance the federal budget, part of Fannie Mae was converted to a private corporation) - создать якобы частное (а потому формально вне бюджета государства) учреждение, чью финансовую устойчивость тем ни менее гарнтировало бы ... государство.

Как это практически работает - подобного рода "полугосударственная" система собственности? В случае если бизнес приносит хорошие результаты, прибыль - как и в любой частной фирме - делится меж совладельцами, акционерами, и пр., а высший уровень руководства получает ежегодно многомиллионные "заслуженные бонусы".

В случае же иной ситуации - когда над такой "полугосударственной" кампанией нависает угроза банкротства - начинаются известных мотивов демагогические стенания о высоко-благородной социальной функции этой организации, которая не может потому просто так выйти из бизнеса как любая иная в аналогичной ситуации частная кампания.

Автоматически распахиваются в ответ на эти неотразимо убедительные ключевые слова "закрома казны" и до того считавшаяся - в удачные для ее бизнеса времена - вполе себе частной коммерческая кампания получает финансовую подпитку из "аварийных статей" госбюджета.

Подобного рода частно-государственные компании получили название GSE - "Government Sponsored Enterprise" - частные компании ... спонсируемые государством.

Понятно какой культуры допустимого риска и уровня финансовой ответственности в целом руководство такой "принципиально непотопляемой" кампании обычно придерживается в бизнесе... Это обстоятельство и оказалось в сущности концептуально исходной точкой для начала поэтапного развития того самого процесса, который, обрастая разного рода иными (длинная история и возможно имело бы смысл когда-то ее обсудить в деталях) того же смысла подробностями со временем как раз и завершился нынешним финансовым кризисом:

    The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate. Together, the three mortgage finance GSEs (Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks) have several trillion dollars of on-balance sheet assets.


Естественно из тех же самых соображений - которыми видимо руководствовался Линдон Джонсон ровно 40 лет назад, когда пытался решить задачу "пушки и масло" (и продолжать расширять масштабы раскочегаренной тогда им войны во Вьетнаме и одновременно финансировать вновь создаваемые им же социальные программы "помощи бедным" проекта "Великое Общество") - нынче решено было встречно-симметричным образом "ополугосударствить" лидеров финансовой индустрии.

Понятно видимо насколько куда как большего порядка "тротилового эквивалента" финансовые мины (по сравнению с аналогичным решением Линдона Джонсона от 1968 года) таким же точно образом заводятся нынче под экономику страны решением свернуть на ровно тот же - точно 40 лет назад к тому Линдоном Джонсоном предначертанный - путь развития теперь уже в сущности весь "топ-уровень" финансовой индустрии США.

Но и это однако все-таки уже вопрос, который - в лучшем случае (если на этот раз обойдется) - только будущие поколения американцев будут расхлебывать.

Нынче же видимо много более острым окажется ближайшей к тому актуальности вопрос. А именно речь пойдет про связанный с принятым решщением о частичной национализации финасовой индустрии острейший дефицит финансового грамотных кадров, которые реально сможет исполнительная власть едва ли не одномоментно - по внезапно раздавшемуся "свистку боцмана" с верхней палубы - рекрутировать вдруг на госслужбу.

Владение заметным пакетом акций целого ряда частично национализированных - а до того целиком и только ли лишь независимо коммерческой основы - финансовых учреждений, потребует появления в соответствующих структурах госвласти весомого уровня ответственности чиновников, способных пусть хотя бы лишь сколько-то рационально контролировать эту вновь возникшую в кризисной ситуации госсобственность.

Откуда бы им - необходимого к тому уровня специалистам в финансовой сфере бизнеса - вдруг одномоментно упасть в госучреждения?

Не в последнюю очередь при этом имеется в виду общеизвестная проблема - разница в уровне оплаты госсслужащих и сопоставимых с ними по уровню квалификации сотрудников коммерческих организаций вообще, ну а уж финансового профиля и тем более.

Похоже, что это обстоятельство окажется одним из тех вопросов, решить которые будет уж всяко не проще, чем пробить в Конгрессе - на волне общей паники - тот самый бэйлаут, практическое использование которого рациональным образом эти самые чиновники - пока еще видимо несуществующие даже и в штатных расписаниях госведомств - как раз и должны будут теперь обеспечивать...