Por qué, cómo, cuándo...

Y si embargo, se sabían cosas, se sabían las conaecuencias de determinados hechos... Una suscinta descripción de la crisis por Dani Rodrik (ver párrafo en cursiva).

Bubbles—steady increases in asset prices divorced from their underlying value—are not a new phenomenon. Their presence was known going back at least to the tulip craze of the seventeenth seventeenth century and the South Sea bubble of the early eighteenth century. They were the object of study in models of varying complexity, including models based on perfectly rational, forward-looking investors (so-called rational bubbles).

The financial crisis of 2008 had all the features of a bank run, and that, too, was a staple of economics. Models of self-fulfilling panic—a coordination failure in which individually rational withdrawals of credit lines produce collective irrationality in the form of a systemic drying up of liquidity—were well known to every student of economics, as were the conditions that facilitate such panics. The need for deposit insurance (coupled with regulation) to prevent bank runs was featured in all finance textbooks. A key pattern in the run up to the crisis was excessive risk taking by managers of financial institutions.

Their compensation depended on it, but their behavior was not consistent with the interests of the banks’ shareholders. This divergence between the interests of managers and shareholders is a centerpiece of principal-agent models. These models focus on situations in which a “principal” (a regulator, electorate, or shareholders) tries to control the behavior of an “agent” (a regulated firm, elected government, or CEO) when the latter has more information about the economic environment than the former. The resulting difficulties and inefficiencies should not have come as a surprise to economists. Another incentive distortion centered around credit-rating agencies that evaluated mortgage securities. These agencies were paid by the same financial institutions whose issuances they rated. That they had an incentive to tailor their ratings to the satisfaction of their paymasters ought to have been obvious even to a first-year student in economics.

The economy-wide consequences of asset price collapses were also familiar to economists after a wave of financial crises experienced by developing countries from the early 1980s on. No one who had studied these episodes should have remained nonchalant about the buildup of private debt in housing and construction in the United States and Europe.

The manner in which deleveraging would reverberate throughout the economy, being magnified along the way as banks, firms, and households all tried simultaneously to reduce their debt and build up their financial assets, was also reminiscent of those earlier financial crises. Clearly, economists did not lack models to understand what was happening.

In fact, once the crisis began to play itself out, the models that we just reviewed would prove indispensable for understanding how, for example,

China’s decision to accumulate large amounts of foreign reserves would ultimately cause a mortgage lender in California to take excessive risks. All the steps in between—the reduction in interest rates as demand for dollar assets went up, the incentive of poorly supervised financial institutions to seek riskier instruments to maintain profits, the building up of financial fragility as portfolios expanded through short-term borrowing, the inability of shareholders to properly rein in bank CEOs, the bubble in housing prices—could be readily explained by existing frameworks. But economists had placed excessive faith in some models at the expense of others, and that turned out to be a big problem.

Many of the favored models revolved around the “efficient-markets hypothesis” (EMH). 7 The hypothesis had been formulated by Eugene Fama, a Chicago finance professor who would subsequently receive the Nobel Prize, somewhat awkwardly, in the same year as Robert Shiller. It says, in brief, that market prices reflect all information available to traders. For an individual investor, the EMH means that, without access to inside information, beating the market repeatedly is impossible. For central bankers and financial regulators, the EMH cautions against trying to move the market in one direction or another. Since all the relevant information is already contained in market prices, any intervention is more likely to distort the market than to correct it. The EMH does not imply that observers could have foreseen the financial crisis. In fact, since it says changes in asset prices are unpredictable, it implies quite the opposite—that the crisis could not have been predicted.

Nevertheless, it is hard to square the model with the reality: a sustained rise in asset prices followed by a sharp collapse. To explain it without jettisoning EMH requires us to believe that the financial collapse was caused by a huge rush of “bad news” about the future prospects of the economy, which markets then priced in instantaneously. (This is more or less what Fama himself would argue in 2013.)† This conclusion reverses the generally accepted line of causation, which goes from the financial crash to the great recession. Excessive reliance on EMH, to the neglect of models of bubbles and other financial-market pathologies, betrayed a broader set of predilections. There was great faith in what financial markets could achieve. Markets became, in effect, the engine of social progress. They would not only mediate efficiently between savers and investors; they would also distribute risk to those most able to bear it and provide access to credit for previously excluded households, such as those with limited means or no credit history. Through financial innovation, portfolio holders could eke out the maximum return while taking on the least amount of risk.

Moreover, markets came to be viewed not only as inherently efficient and stable, but also as self-disciplining. If big banks and speculators engaged in shenanigans, markets would discover and punish them. Investors who made bad decisions and took inappropriate risks would be driven out; those who behaved responsibly would profit from their prudence. Federal Reserve Chairman Alan Greenspan’s mea culpa before a 2008 congressional panel would speak volumes about the prevailing state of mind: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included,” he confessed, “are in a state of shocked disbelief.”