“So I am skeptical about the argument that the subprime mortgage problem will contaminate the whole mortgage market, that housing construction will come to a halt, and that the economy will slip into a recession. Every step in this chain is questionable and none has been quantified. If we have learned anything from the past 20 years it is that there is a lot of stability built into the real economy.”

— Robert Lucas Jr.

Robert E. Lucas, "Mortgages and Monetary Policy", The Wall Street Journal WEDNESDAY, September 19, 2007

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Robert Lucas Jr. 9

American economist 1937

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“Reckless people have deluded themselves that this was a subprime crisis. But we have problems with credit-card debt, student-loan debt, auto loans, commercial real estate loans, home-equity loans, corporate debt and loans that financed leveraged buyouts… We have a subprime financial system, not a subprime mortgage market.”

Nouriel Roubini (1958) American economist

Quoted in Stephen Mihm, "Dr. Doom," http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html?_r=1&oref=slogin The New York Times (2008-08-15).

“Incredibly, at this critical juncture in financial history, after which so much changed so quickly, the only constraint in the subprime mortgage market was a shortage of people willing to bet against it.”

Michael Lewis book The Big Short

Source: The Big Short (2010), Chapter Three, " How Can A Guy Who Can't Speak English Lie?", p. 80

“[Obama White House] rescued the economy from the worst recession.”

Rahm Emanuel (1959) politician, investment banker, White House Chief of Staff

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“A decline in the national housing price level would need to be substantial to trigger a significant rise in foreclosures, because the vast majority of homeowners have built up substantial equity in their homes despite large mortgage-market financed withdrawals of home equity in recent years.”

Alan Greenspan (1926) 13th Chairman of the Federal Reserve in the United States

July 2005 http://www.startribune.com/nation/12598281.html, in testimony to the House Financial Services Committee.
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“Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans. Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.”

Ron Paul (1935) American politician and physician

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“We will not, on the altar of money, mortgage our conscience, mortgage our faith, mortgage our salvation.”

Peter Akinola (1944) Anglican Primate of the Church of Nigeria

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“I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk.”

Alan Greenspan (1926) 13th Chairman of the Federal Reserve in the United States

September 2007 http://www.startribune.com/nation/12598281.html, Greenspan's memoir The Age of Turbulence: Adventures in the New World.
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“Forget about the market updates. Here's a better way to find out about the economy-your economy. Take a walk. And ask some questions.”

Jim Stanford (1961) Canadian economist

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“Listen, it is absolutely clear the economy is not doing fine. That's the reason I had a press conference. That's why I spent yesterday, the day before yesterday, this past week, this past month, and this past year talking about how we can make the economy stronger. The economy is not doing fine.”

Barack Obama (1961) 44th President of the United States of America

press conference http://www.whitehouse.gov/the-press-office/2012/06/08/remarks-president-obama-and-president-aquino-philippines-after-bilateral welcoming President Aquino of the Philippines, , quoted in [2012-06-10, Obama's private sector remarks critiqued, defended on Sunday shows, Morgan, Little, Los Angeles Times, http://articles.latimes.com/2012/jun/10/news/la-pn-obamas-private-sector-remarks-critiqued-defended-on-sunday-shows-20120610, 2012-06-29]
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“My interest had been in a broad class of situations, broader than the advanced industrial market economies, including situations in third world countries, and in countries attempting to have some kind of socialist approach to their problems. I have been interested in how one can construct efficient mechanisms that have the decentralization features similar to a market but that do not necessarily resemble a market. For this purpose, I formulated the notion of an informationally-decentralized economy in which perfect competition was just a very special case…”

Leonid Hurwicz (1917–2008) Russian-American economist and mathematician

Source: David Warsh, " The Road to a System that Works (Without Shooting People) http://www.economicprincipals.com/issues/2007.10.21/69.html" at economicprincipals.com, October 21, 2007.

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