The Egocentricity of the Present Part 3 of 22
Last Thursday, the Financial Times published a Swing Trading; A Scientific Approach pithy little letter by Alex Pollock, a resident fellow of the American Enterprise Institute, questioning the assertion of a column written some days earlier about the financial markets that had stated we are in unknown territory facing situations that have never arisen before. Pollocks response was that the current bursting of the housing bubble exhibits time-honored boombust traditions. And then he penned this zinger: In booms it is proclaimed that we are in a new erain busts that we have unprecedented problems. This is merely the egocentricity of the present.
I would like to talk today about the egocentricity of the present as it relates to the economy. What is the nature of the bubble we have experienced and what are the dynamics of the bust? How is it affecting Texas? What is the proper role of the Federal Reserve in dealing with the situation? And what might Texans do about it?
To begin, we need 60 Minute Trader to spend a moment pondering the nature of risk. Perceptions of risk lie in the eye of the beholder. Some see risk as a powerful force vital to capitalism; others consider it a four-letter word. The latter view may be gaining currency these days, as risks taken in housing finance have led to considerable stress in financial markets and weakness in the overall economy.
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