This post from last week noted how Felix Salmon had become NY Times business columnist Ben Stein’s worst nightmare, sort of how Larry Ribstein had been to Steins’ fellow columnist, Gretchen Morgenson.
Now, Stein’s nightmare is multiplying exponentially. On the heels of Stein’s latest Sunday Times column, Salmon, Yves Smith, and Dean Baker have already pointed out the vacuity of Stein’s analysis.
Do the Times business editors even notice that Stein has become a laughing stock?

Merrill Lynch’s announcement this past week of a third-quarter loss of $2.3 billion and a $8.4 billion charge for failed credit and mortgage-related investments generated a large number of comments from around the blogosphere on the future of Merrill’s CEO, E. Stanley O’Neal, none of which were better than this one from The Epicurean Dealmaker:

I cannot speculate what will happen next at Mother Merrill, but I can guarantee you O’Neal’s days at the helm are numbered. Being a CEO at an investment bank is not unlike crowd surfing at a mosh pit: it’s a pretty cool way to move around quickly, you are supported entirely by other peoples’ efforts, and everyone tries to get a piece of you. Unfortunately, when the crowd loses interest in supporting you, you tend to fall fast, hard, and painfully. In addition, after dropping you lots of your former investment banking subordinatesóboth friend and foeóhave the added charming tendency to skewer you repeatedly with long knives. Et tu, Brute?

Read the entire piece.

First, Larry Ribstein became NY Times business columnist Gretchen Morgenson’s worst nightmare by exposing the vacuous nature of her columns.
Now, Felix Salmon has become part-time NY Times business columnist Ben Stein’s worst nightmare (see also here) in much the same way:

Stein’s main point is that reality is fine; it’s just the media which is making things look bad. “Newspapers (which often sell on fear, not on fact) talk frequently about a mortgage freeze,” he says. Although if you do a Google News search on “mortgage freeze”, you find exactly one newspaper article: this one, by Stein. Meanwhile, he says, and I swear I am not making this up, “there is still a long waiting list for Bentleys in Beverly Hills”. Well in that case there couldn’t possibly be a housing crisis!
“This country does not look like a country in economic trouble,” concludes Stein. Well, maybe if you live in Beverly Hills and you have lots of money invested in the stock market, then that might seem to be the case. But Stein doesn’t seem to consider that most Americans might not fall into that category.

Read the entire post. Do the Times editors even review Stein’s blather before publishing it?

Larry Ribstein notes the sweet irony of the New York Times management not being quite, as the Times business columnists might say, adequately responsive to its own shareholders.
I’m sure that Gretchen and Ben will be right on top of this development.

You can usually count on Michael Milken making an interesting observation or two whenever interviewed about markets, particualarly the housing market:

“The idea that any loan against real estate is a good loan has never been a rational thought.”

Clear Thinkers favorite James Hamilton provides this interesting post on Princeton professor Alan Blinder’s NY Times Sunday op-ed in which Blinder makes the common sense observation that we first have to figure out what went wrong in the subprime mortgage mess before we can “even begin to devise policy changes that might protect us from a repeat performance.”
Blinder proceeds to identify six groups who might bear at least some of the responsibility for the financial fallout: (1) homebuyers who took on mortgages they couldn’t repay; (2) mortgage originators, for issuing mortgages that homebuyers couldn’t pay; (3) bank regulators, who may have dropped the ball in failing to slow down the runaway train; (4) the investors who ultimately provided the funds for the mortgages, and (5) securitization, which led to assets that are too complex for anyone truly to understand, and (6) ratings agencies that underestimated the risk.
Professor Hamilton focuses on group 4, the investors, and makes the following observation:

Blinder doesn’t seem to give us a lot to go on with understanding Finger #4, beyond the notion that these instruments were new and complicated and investors were stupid. Stupid, I might add, to the tune of hundreds of billions of dollars.
Perhaps that’s all there will ever prove to be to this story. But I can’t help looking for more, thinking there is likely to be something special that caused the usual incentive structure to break down here, something we might be able to understand with more orthodox economic methodology. In my remarks at Jackson Hole, I suggested an interaction between monetary policy and implicit government guarantees as providing one possible basis for a rational calculation on the part of investors. Jin Cao and Gerhard Illing of the University of Munich have an interesting new research paper spelling out the details of exactly how such an equilibrium might play out. Professor Illing lays out the implications for practical policy-making here.
As I also said in Jackson Hole, I am not sure why investors perceived it to be in their best interests to buy these assets. But I am sure that this is the right question, and would encourage young economic researchers seeking to make a name for themselves to take a swing at it.
Because I basically agree with Blinder– until we know the answer, it’s not clear exactly how to fix the problem.

I agree with Professor Hamilton, although I would point out that the best “fix” of the problem is to allow the market to adjust — with a minimum of regulatory interference — to what happened in the subprime meltdown. Which reminds me of a great line that Arnold Kling passed along the other day while lauding the George Mason economics department:

“I like to put it his way: at [the University of] Chicago, they say “Markets work well. Let’s use markets.” At MIT, they say “Markets fail. Let’s use government.” At GMU, they say “Markets fail. Let’s use markets.”

Need a refresher course on just how risky it is exploring for oil and gas?
If so, check out this Wired article on Chevron’s venture to drill for oil 30,000 feet under the Gulf of Mexico.
I don’t know about you, but I think the folks investing in such ventures deserve every penny of profit that is may be generated from them.