One issue that I have with all of the analysis of the current crisis coming from the left and the right is the intellectual dishonesty that they engage in. They seem hesitant to say, 'look, the nature of the world's economies have changed. The thing is, we have only a tenuous idea as to how.'

For example, long ago, when production was king, the hierarchy of real estate values in port cities went like this:

Industrial (Port or Factory) > Office > Residential

This was based on the belief, widely held by the nation's businessmen at the time, that the value of a given 'widget' is related in a very real sense to the total value of the things that 'widget' will produce in the future. This rule was true for valuing everything, real estate is just a convenient example here.

Well fast forward to the late 1990's and all of a sudden a businessperson finds that there is profit to be made converting factories, warehouses, and even entire ports to condos. That is, converting industrial real estate to residential real estate created profit for developers who undertook to do it. Now in a normal economy perhaps this could happen in a few places as production shifted elsewhere. What we need to consider though is that this was happening in virtually every American city of any appreciable size. This was drawing down American productive capacity in a systematic fashion. Where new productive capacity was built, it was built outside of the cities. In essence, FURTHER away from the ports. This indicates that the planners foresaw a diminished interest in exporting anything that was produced.

Now all of that might make perfect sense, I would need more data to make that determination. My point is that people on the left in the right tend to neglect an in depth analysis of trends like this, and instead appeal to what might be termed 'soundbite economics'. 'It's the unbridled greed of the elites!' Or, 'Well this is what happens when the government forces you to give loans to poor minorities!' The fact the market was buying these bonds and entering into these mortgage contracts, makes little difference to people who make the 'unbridled greed of the elites' argument. The fact that the market consists of many times as many teachers, police officers, and plumbers as investment bankers and real estate developers, is similarly ignored. On the other side, the self evident reality that striving yuppies rather than impoverished minorities were the ones buying this new housing, and then defaulting, is conveniently omitted from their protestations of government interference.

In any case, we would be far better served to look at things going on in our real estate market and ask what do these things tell us about the fundamental nature of our larger economy? As I said, I would need more data to make a determination as to the appropriateness of some of the pricing that was happening. That said, at the very least, the seeming financial prudence of converting industrial to residential should have told us, 'Hey, guys, here's something you should look at to make sure things make sense with respect to where you want your nation's economy to go in the future. Because I know in the past you always thought that production was king, but your pricing is saying otherwise right now.'

I think the economic world may have changed, and since we are still making decisions the way we have always made them, we find ourselves in a crisis. I'm no professional economist, still, I believe we really need to be able to articulate where and how the economic world has changed prior to prescribing solutions. An exhaustive enumeration would be ideal, though it is inessential. I just mean that policy makers should have SOME idea how things have changed at that fundamental level, and whether those changes make sense for the United States.

I told you all of that to tell you this. People on the left and the right making these arguments through their respective think tanks, would have as much trouble as anyone else enumerating the changes in economic fundamentals that have developed in the past say, 20 or 30 years. The difference is, intellectual honesty. That is, most are willing to acknowledge that deficit, whereas think tank gurus will give you an answer that aligns with their school of thought. Without regard to any of the contradicting facts.