A flawed second draft of history
In “A flawed first draft of history“, FT editor Lionel Barber gets history wrong (again). He claims the origins of the financial crisis were too hard to spot even for financial reporters, because they were to be found “in the credit markets, coverage of which in most news organizations counted as a backwater.” All those derivatives and such were the root of the problem. Actually, as some economists predicted,* the origins of the current crisis were to be found inthe bursting of a huge housing bubble (you may have heard of this). The Financial Times, on the other hand, believed Harvard economists who found that the growing number of households in the US meant that the increase in housing prices was warranted. Third time’s a charm!
* I predicted it, too, when I first heard that the Fed was raising interest rates again in 2004. Alas, I have no written proof.