***The must read post of the day. MMR will have comments on this.****
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Chart of the day: Growth and debt | Felix Salmon
Money is just an illusion, but also a reason we can’t grow faster. It’s just depressing.
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The Power of Plutocratic Pettiness – NYTimes.com
Well, the last few months have been instructive for me
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Brad DeLong: Yes, There Is No Good Reason Not to Raise Marginal Tax Rates from Their Current Values
What do you say to this? How do you make them get it?
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Saudi Arabian Baboons Kidnap Puppies & Raise Them As Pets. – YouTube
Wow!
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Brad DeLong: Robert Hall’s Comprehensive Unemployment Rate
A comprehensive unemployment measure. If this is used in a TC rule style fiscal rule, we’d need to change the multiplier.
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Did lead poisoning cause the fall of the roman empire?
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Part of the problem with lots of data and innovation is the innovation is lumpy. Is MERS a good system? No – but it’s stupid to think things like MERS will get less prevalent. We now have the ability to store all the data, and parse all the data, and view all the data. The reason Mandelbrot studied financial markets is because of the treasure trove of data. The first written records are financial transaction information. Humans care about financial transactions.
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http://www.bankofengland.co.uk/publications/Documents/speeches/2012/speech552.pdf
I’ll be touching on some of this in the series on money like assets. Repos are just really fast secured loans, but they change the landscape like cars did compared to horses.
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How a Whistleblower Halted JPMorgan Chase s Card Collection – American Banker Article
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Credit default swaps are insurance products. It’s time we regulated them as such. | The Big Picture
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Economist’s View: Divine Coincidence and the Fed’s Dual Mandate
As soon as you have any frictions at all, shooting for low inflation results in bad policy. Isn’t the plain English translation of Sub-optimal policy “bad policy”?
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Why The Fed Should Ignore Gasoline (And A Bunch Of Other Stuff Too)
I keep telling people the cure for energy inflation is way worse than the disease. I think it’s sinking in.
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Boomers Find 401(k) Plans Come Up Short – WSJ.com
What were the odds?
Per the last link, can I hear “businesses hire when they are swamped with demand?”
Amen Brother!
Businesses Hire when they are swamped with demand!
P.S. I bumped this up to the first spot – I should have done that in the initial draft.
“Credit Default Swaps are insurance products. It’s time we regualted them as such.”
I am an insurance professional and have experience both as an underwriter and broker dealing with what most consider more complicated forms of coverage- Professional Liabilty prodcuts. I have been screaming about this to anyone who will listen for 3 years now. I personally know someone who spent years at the top echelons of AIG. You will likely never see the media trace any of the casuality of the 2008 crisis back to Hank Greenberg leaving amid ‘scandal’ (which was drummed up by the [sarcasm on] honorable Elliot Spitzer, a man that can be described as a careerist at best). But when Hank left, so followed many people who were loyal to him and had learned so much from him. With them went AIG’s entire risk management process/style. If Hank et al had never left AIG, the Fin Serv. outfit that was issuing CDS’s left right and center would have been operating under strict risk management guidelines. Obviously, this is not the soluition going forward but shows that these products being written by the wrong people is disaterous, hence, they should be regulated just like insurance contracts (which they more or less are, hell they’re quoted in ‘premium’ aren’t they?).
That’s an interesting point about Hank Greenberg. He certainly had the last laugh. After he fell, Spitzer and then AIG fell even farther.
No kidding. I thought the way Giuliani conducted his witch hunts was extreme (if anyone doesn’t remember he had people led out of their office buidlings in handcuffs, having effectively ruined their careers he neglected to have any real case built against them to the point that some were not even charged with anything). Spitzer took it to a new level; it was only a matter of time before someone went rooting around his closet for skeletons.
As far as the fall of AIG, I can’t imagine Hank Greenberg is having a laugh over it. He spent most of his life building that company into something that was destroyed in less than half a decade.
Mike,
Have you followed LENR research for some time? I was always given the impression that it is all smoke & mirrors so I know little about it. Can you speak to any of its credibility?
Best,
DCA
So Mankiw apparently updated his textbook with commentary on the financial crisis.
http://worthpublishers.com/Catalog/uploadedFiles/Content/Worth/Product/About/Look_Inside/Mankiw,_Macroeconomics_8e/Mankiw_Macro_ch20.pdf
“There are limits, however, to how much conventional monetary and fi scal
policy can do. A central bank cannot cut its target for the interest rate below zero. (Recall the discussion of the liquidity trap in Chapter 12.) Fiscal policy is limited as well. Stimulus packages add to the government budget defi cit, which is already enlarged because economic downturns automatically increase unemploymentinsurance payments and decrease tax revenue. Increases in government debt are a concern in themselves, because they place a burden on future generations of taxpayers and call into question the government’s own solvency. In the aftermath of the fi nancial crisis of 2008–2009, the federal government’s budget defi cit reached levels not seen since World War II. This explosion of government debt gave rise to the so-called Tea Party movement, whose goal was to reign in government spending. In August 2011, Standard & Poor’s responded to the fi scal imbalance by reducing its rating on U.S. government debt below the top AAA level for the fi rst time in the nation’s history, a decision that made additional fi scal stimulus more diffi cult.
The limits of monetary and fi scal policy during a fi nancial crisis naturally lead
policymakers to consider other, and sometimes unusual, alternatives. These other types of policy are of a fundamentally different nature. Rather than addressing the symptom of a fi nancial crisis (a decline in aggregate demand), they aim to fi x the fi nancial system itself. If the normal process of fi nancial intermediation can be restored, consumers and business will be able to borrow again, and the economy’s aggregate demand will recover. The economy can then return to full employment and rising incomes. The next two categories describe the major policies aimed directly at fi xing the fi nancial system.”
I can’t believe this garbage can get published.
Also, am I out of the loop? Is there still a credit crisis in the banking system, or is credit seized more so because the economy sucks?