[lbo-talk] origins of the housing boom

SA s11131978 at gmail.com
Tue Aug 30 08:45:34 PDT 2011

On 8/30/2011 11:35 AM, Julio Huato wrote:

> To paraphrase Hegel, risk is always concrete. It's about variability,
> contingency, etc. So, to say that risk was not hidden, because
> "*everyone* knew these investments would go bust if house prices fell"
> is no good, because part of the risk resulted from not knowing exactly
> *when* and *how* these investments would go bust. (Now, I'm not
> rejecting your rejection of the theory that the "cause of the bubble
> was the hiding of risk." I'm just poking a hole in your argument
> rejecting such theory.)

I don't see how your conclusion follows from the premise. Yes, of course, people didn't know exactly when and how the investments would go bust. But their ignorance was not due to that information being *hidden* in arcane technical reports or camouflaged in advanced math. It was absolutely typical of any bubble throughout history -- everyone knows a price collapse will spell doom, some people also understand that a price collapse is inevitable, but no one can profit from it or stop it before the end arrives.


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