Where is details on How Joseph Stiglitz Blew It On Fannie And Freddie?
How could three prominent economists have been so dumb-foundingly wrong about the systemic risk of Fannie Mae and Freddie Mac? Today’s Wall Street Journal discusses a 2002 paper declaring that “on the basis of historical experience, the risk to the government from a potential default on GSE debt is effectively zero.” It’s authors were Jonathan Orzag, Peter Orszag and Joseph Stiglitz, who had won the Nobel prize in economics the year before. We’ve embedded it below so you can read the whole thing. As the WSJ edit page explains: The Stiglitz-Orszag paper’s method was to put the companies through “millions of potential future scenarios,” and then to judge the likelihood of default. The assumptions in the test were said to be “severe.” Even so, the probability of a default was found to be “so small that it is difficult to detect.” Some $111 billion in taxpayer-funded bailouts later, with perhaps hundreds of billions to go, the risks have been detected. They noted the government officials h
See the link and text below: http://www.businessinsider.com/how-joseph-stiglitz-blew-it-on-fannie-and-freddie-2009-12 How Joseph Stiglitz Blew It On Fannie And Freddie John Carney|Dec. 1, 2009, 10:18 AM joseph stiglitzHow could three prominent economists have been so dumb-foundingly wrong about the systemic risk of Fannie Mae and Freddie Mac? Today’s Wall Street Journal discusses a 2002 paper declaring that “on the basis of historical experience, the risk to the government from a potential default on GSE debt is effectively zero.” It’s authors were Jonathan Orzag, Peter Orszag and Joseph Stiglitz, who had won the Nobel prize in economics the year before. We’ve embedded it below so you can read the whole thing. As the WSJ edit page explains: The Stiglitz-Orszag paper’s method was to put the companies through “millions of potential future scenarios,” and then to judge the
