> The theory that "risk was hidden" is based on the idea
> that the only way anyone could have understood the risk
> of these investments was to read a 1400-page report or
> to have a Ph.D. in math.
I don't know why you keep going on about this; no one has put forth this idea that the risk was hidden. Everyone in this thread has been doing a pretty good job of responding to the other pieces of your postings that we've had issue with.
> And people make arguments like yours: lots of investors would
> buy anything with a AAA rating.
For the record, I said somewhat the contrapositive? of this: lots of investors are forbidden from buying something that's *not* AAA. Which is of course a very different thing.
> I would summarize my entire argument this way. Suppose you
> or I traveled back in time to 2005 and got a job writing for
> the WSJ. We pitch our editor on a story that says (a) housing
> is hugely overvalued and (b) the major banks will all go bankrupt
> when house prices collapse.
Plenty of people sounded this warning. Many were rejected or fired. Ask Robert Shiller about it.
Here's a good one for you: http://www.bis.org/publ/work147.pdf Presented at Jackson Hole in 2003.
Ask Madelyn Antoncic: http://www.guardian.co.uk/business/2009/feb/15/banking-recession
> If the answers to these questions are "no," then you can't say the
> cause of the bubble was the hiding of risk.
Well, you've done a great job of proving something that no one doubts
:-)
/jordan