“In 2002, Joseph Stiglitz, the Nobel economics prize winner and two co-authors (Jonathan Orszag and Peter Orszag), published an article (‘Implications of the New Fannie Mae and Freddie Mac Risk-based Capital Standard’) in Fannie Mae Papers. They argued that Fannie Mae’s and Freddie Mac’s risk-based capital standard made it very unlikely that the two GSEs (government-sponsored enterprises) would ever require a government bailout. Their results suggested that ‘the risk to the government from a potential default on GSE debt is effectively zero,’ even in ‘the financial and economic conditions of the Great Depression.’ The authors apparently underestimated the possible credit losses from a deep recession, besides ignoring the possibility that the quasi-nationalized housing market and the GSEs could themselves generate a recession. Fannie Mae and presumably the learned authors are not especially proud of this paper, which has disappeared from the GSE’s site,” but our friend Pierre Lemieux, Canadian economist and libertarian extraordinaire, has reproduced it on his site.

So what if Stiglitz is wrong most of the time? Other than some libertarians and devotees of the school of Austrian economics, most pundits make a perfectly good living being mostly wrong.

Public goodwill runs eternal for these failed “experts.” Neoconservative talking twits had been wrong all along about the invasion of Iraq; They consistently dished out dollops of ahistoric, unintuitive, and reckless verbiage. Yet they’ve retained their status as philosopher-kings.

Why not left-liberals like the Keynesian Stiglitz? (Not to be outdone, Republicans are also Keynesians. Or Republikeynsians.)