In last week's article, Paul Krugman's argument that the government's two enormous government sponsored enterprises, (GSEs), Fannie Mae and Freddie Mac, had little to do with the housing crisis was introduced, (1). As a preliminary to discussing whether this argument makes any sense, last week's article also introduced the following two items;
Gordon Bethune, the former CEO of Continental Airlines, famously said of the airline industry, "you're only as smart as your dumbest competitor." The point being, any airline - no matter how well run - can be completely undermined by a competitor dedicated to increasing market share at the cost of profitability.
Thomas Sowell, who has a degree from Harvard in economics, said the best thing about having a Harvard degree was 'never again having to be impressed by someone with a degree from Harvard." In this article, Sowell's opinion of Harvard graduates will be extended to Harvard faculty in the person of Lawrence H. Summers.
Preface and Update:
In his post-crisis memoir, The Courage to Act, Ben Bernanke recalls 'seething' in anger at AIG;