Fama, Shiller, Hanson and Merton: Noblesse Oblige Nobel Oblaaaaaaa

2013 Nobel Laureates for Economics Raise Serious Concerns 

by Wendy A. Manlicher for CPW News Service

     On October 14, 2013 Eugene Fama, Lars Peter Hanson, both from the University of Chicago and Robert Shiller of Yale, won the Nobel Prize for Economics.

     Fama won for showing investors that they cannot understand the information streaming from Wall Street fast enough to benefit from it.  Shiller’s work shows that the market can act irrationally while reaching prices that have no apparent basis in the reality of economic fundamentals.  At 67 years old Shiller, who predicted the 2000 dot com crash and the 2007 housing bubble burst, found the Nobel Prize coming just in time for his retirement.  Radio money manager, Dave Ramsey, is said to have commented, "Wow, he predicted that?  Brilliant!" Hansen won for his creation of ways to test why asset prices move as they do. In such a market as that described by Shiller and Fama, “it is not altogether clear why anyone would want to spend time doing that,” said Frank Surley of BPPE Investments.

     “When you look at the fact that the Nobel Prize was given to Robert Merton for his creation of the metrics that created the schizoid credit default swap mumbo jumbo that tanked the U.S. economy and triggered the bankruptcy of Lehman Brothers that then triggered Hank Paulson’s dog and pony show of the 2008 Wall Street bail out when 92% of local U.S. banks were solvent, you've got to wonder just what the Nobel Prize is and why it is even given,” said Surley.

     “Take the fact that John Nash won the Nobel Prize for his ‘Governing Dynamics’ that indicated that the theories of economist Adam Smith needed revision.  Anyone who has seen the film A Beautiful Mind remembers one scene.  Nash reasoned that five men all competing for a beautiful blond among six women, would all lose.  However, if they all go for the five brunettes and leave the blond alone, they won’t check each other while offending the other women.  The result? They all get laid.  Wonderful! Give Nash the Nobel Prize,” said Surley.

     “On the other hand, if I’m Nash and I go get my cousin Ramon from Peru and ask him to go after my appointed brunette, selling the guys on the same plan, I’m freed to go after the blond anyway.  All’s well that ends well.  I should get the Nobel Prize for showing the value of a liberal immigration policy,” said Surley. 

     “The Nobel Committee will not take back the Nobel Prize once it is given no matter how ridiculous it looks by the brush stroke of history.   Neither will it comment on the fact that following the Great Depression with the passing of the Glass-Stegall Act, investment and banking houses were purposely prohibited from both functions and  the two functions were separated so that the greed gone wild that Merton’s metrics tried to justify would not create the Wall Street freak show that this latest trio of wizards have so accurately described.   They won for describing, in essence, what would have been averted had Congress not repealed Glass-Stegall in 1999 opening the flood gates of idiocy,” said Surley.