Andrew Lo denies the crisis implicated efficient markets, Wall Street pay, or bank leverage

Evidence

In his most recent survey, Lo tends to favor neoliberal books on the crisis, such as Rajan’s Fault Lines and Rogoff and Reinhart’s This Time Is Different, while disparaging books such as Stiglitz’s Freefall. Economists on the center left are chided for getting a little testy, whereas books by neoliberals are treated as par for the course. There he also innovates a few more rather contrarian positions on the crisis: that the efficient-markets hypothesis (more on this in the next chapter) did not lead investors astray; that Wall Street compensation packages did not distort incentives and behavior; and finally, that the big investment banks did not become especially highly leveraged in the boom. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 572

Categorization

• QUESTION: Worth chasing: what evidence, if any, does Lo marshal for the claim that big banks did not become highly leveraged — that’s the most empirically falsifiable of the three.
• XREF: Previews the efficient-markets chapter treatment this book promises next, and connects to the reader’s prior work on how orthodox economic theory survived 2008. — connects to: Chicago economists deny the crisis falsified their core theories — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 718

Broader Connections

• Chicago economists deny the crisis falsified their core theories #corroborates (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 718