Zubin Jelveh

Worth Reading
September 18, 2009

Should the FDIC tap banks or taxpayers for needed funds? WaPo: the FHA's reserves will soon drop below required levels. Megan McArdle puts chances of healthcare bill passing at 75%. Could criminal charges be filed in probe of BofA-Merrill deal? NYT banking reporter Eric Dash's view on problems with Wall St. pay. Reviews of business and economics news apps for the iPhone.

Maybe Securitization Didn't Cause the Crisis
September 18, 2009

Soon forthcoming in the top-ranked Quarterly Journal of Economics is a very well- received paper by four economists with convincing evidence of what many believe was the primary cause of the subprime boom and bust: That securitization took away the incentive for lenders to properly vet borrowers. But there's some new evidence questioning the paper's findings.

Worth Reading
September 17, 2009

Surowiecki on the shortcomings of the Baucus healthcare bill. In monetary policy, it's better to prick a bubble that clean up after it pops. Cool interactive graphic from Economy.com tracking the recovery by state. Ezra Klein interviews the CBO's Doug Elmendorf. A case against restricting bankers' bonuses.  

Is Treasury Courting Inflation?
September 16, 2009

Deborah Solomon and Jon Hilsenrath at the WSJ inform us that, in order to keep from hitting the $12.1 billion trillion debt ceiling, the Treasury Department is winding down a one-year-old program it created to borrow funds on behalf of the Fed: Since last year, the Treasury has been selling special short-term securities and placing the proceeds in an account at the Fed.

Worth Reading
September 16, 2009

What recession? Wages are rising. (Or are they?) First firm to participate in toxic loans progam is selected. Lehman owes about $2 billion in back taxes. Barclays shows that accounting hijinks are alive and well. Scott Sumner: the Fed caused the crisis by printing too little money. Felix Salmon gets profiled.

The Paradox of the Paradox of Thrift
September 16, 2009

Keynes' paradox of thrift holds that if everyone tries to save at the same time during a recession, then the economy continues to contract due to a fall in demand. This sends incomes lower and gives people less money to sock away, so that total savings actually fall instead of rising. The implication for our times is that a new era of frugality might not be what the economy needs. But in a new IMF paper, Yasser Abdih and Evan Tanner argue that Keynes' paradox might not apply after a financial crisis. In normal times, companies can finance investment through their own savings.

Worth Reading
September 15, 2009

Bernanke joins the "recession is over" crowd. Fed unlikely to cut back on mortgage purchases. Does Krugman's target Robert Lucas actually agree with Krugman? John Cochrane and Luigi Zingales say gov't indecision created post-Lehman crisis. Fed study: 33% of companies issuing short-term debt experienced runs on it beginning in Aug '07. Noam looks at how China keeps tabs on its biggest investment: the U.S.

Worth Reading
September 14, 2009

Philly public library system on the brink of closure. John Cochrane responds to Krugman, who fires back. David Warsh: "On the evidence so far, it is Robert Lucas, not Paul Krugman, who has been more nearly correct." How Glenn Beck betrays conservatives by attacking Cass Sunstein.  Only 25% of economists say employers should provide health insurance for full-time workers. Intrade odds for health plan passage in '09 are falling. Delinquencies on securities tied to commercial real estate are ratcheting up.    

Why Are Currency Traders Now Borrowing Dollars?
September 14, 2009

For years the term "carry trade" was synonymous with the Japanese yen. Because of the country's zero-interest rate policy, traders borrowed yen on the cheap and purchased higher yielding assets in other countries and markets, pocketing the difference. But in recent weeks, a key borrowing rate for the dollar -- the 3-month Dollar Libor -- has fallen below the 3-month Yen Libor. That means the dollar has added "carry trade currency" to its other titles: safe haven and world's reserve currency.

Worth Reading
September 11, 2009

The man behind AIG's implosion, Joseph Cassano, may face charges. Why have wages for college grads been falling?  The recession may have ended but official word may not arrive until 2010. Does the Fed have too much influence over the economics profession? The Economist: No smoking gun on oil speculation. Securitization is alive and kicking.

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