Post: #41

(07-08-2012 6:50 AM)Pheroquirk Wrote:  
It would have been impossible to know he was write based on objective measures, but he clearly was.

The article you cite makes the exact opposite argument that you do.

Quote:My prediction was based on my research into the residential mortgage market and mortgage-backed securities. After studying the regulatory filings related to those securities, I waited for the lenders to offer the most risky mortgages conceivable to the least qualified buyers. I knew that would mark the beginning of the end of the housing bubble; it would mean that prices had risen — with the expansion of easy mortgage lending — as high as they could go.

Note that he's outlining a process here that's fairly repeatable. If there were another similar crisis, we might be able to apply his techniques and note their utility or failure.

Quote:I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate a greater volume of loans. Throughout 2004, I had watched as these mortgages were offered to more and more subprime borrowers — those with the weakest credit.

I'd say that loosening credit standards is something which can be fairly objectively measured in aggregate, even if it may be uncertain in any particular case. The requisite LTV for a loan is pretty objective.

Quote:The market for subprime mortgages and the derivatives thereof would not begin its spectacular collapse until roughly two years after Mr. Greenspan’s speech. But the signs were all there in 2005, when a bursting of the bubble would have had far less dire consequences, and when the government could have acted to minimize the fallout.

Even further, I read the blogs of people predicting the mortgage meltdown before it happened based on objective measures such as home prices over the past 100 years, among many, many other measures (though they seriously underestimated the negative fallout of the bubble's collapse.)

But here's the thing; the article has Greenspan saying that Mr. Burry was just a "lucky flipper of coins." For Mr. Burry to be able to disprove that to a third party, Burry would have to be able to cite objective (universally observable) information and procedures, which he did, and that information would have to be applicable to future scenarios.

In any case, it doesn't really do anything for me to knock down strawman after strawman. It's one thing if a person clearly represents my views and argues against them. But it's pointless to just say over and over "no, this mis-represents my point."

You seem to associate "Objective evidence" or "objective standards" with some kind of blind faith in authority. I don't share that association. On the contrary, I hold the opposite view. Objective evidence is what allows expert opinion to be criticized and brought low when needed. Authority may use objective evidence, but such use places that authority on the same level as anyone who might argue against them.