Yglesias Misses The Point

Matthew Yglesias, a liberal blogger at Think Progress digs up an article by John Cochran from 2007 and then smugly attempts to discredit Cochran's entire career. Yglesias quotes from the article:

In the recent turmoil in financial markets over the failure of subprime mortgages, investors should remember “caveat emptor,” or let the buyer beware, said John Cochrane, Myron S. Scholes Professor of Finance. “These are matters for buyers and sellers, not regulators,” Cochrane said during a Myron Scholes Global Markets Forum, organized by the Initiative on Global Markets and sponsored by the CME Trust and Chicago Council on Global Affairs, at the CME Auditorium September 25.

“Nobody else gets hurt if you buy a lousy mortgage pool,” Cochrane said. “The government doesn’t need to write a new rule every time someone buys a rotten tomato. Investors will demand the right amount of transparency, complexity, and risk-sharing – or monitoring of mortgage pools – unless they all get bailed out and learn to count on a bailout instead. [Yglesias' Bold]

But as one astute commenter pointed out, Yglesias missed one of the most important lines:

"...unless they all get bailed out and learn to count on a bailout instead."

Now, does this last statement mean that Cochran is right? Not necessarily. However, it is a very important point that deserves attention from someone claiming to be a serious policy analyst. I would have been interested to see Yglesias comment on this. Instead, all we got a poorly constructed "gotcha!" moment.