...is here 10 years early, as far as the job market goes. BusinessWeek economist Michael Mandel has a depressing graph today showing that there are just 1.1 percent more jobs (about 1.1 million) in the private sector than there were a decade ago, by far the worst performance since 1949: Over the same period, public payrolls grew by 2.4 million jobs, or about 10 percent.
The NYT profiles bond king and bank-nationalization foe Bill Gross. The Fed is discussing an overhaul of repo markets. Goldman Sachs is set to pay out record bonuses. The SEC and CFTC want "unimpeded" authority to regulate derivatives. Has Libor become useless? --Zubin Jelveh
A new paper by IMF economists Deniz Igan, Prachi Mishra, and Thierry Tressel shows that financial firms spared little expense in their lobbying efforts during the lending boom.
Sheila Bair has tepid words for the overhaul plan. Details of the House's health care reform proposal. How The Economist continues to thrive. More doubts about the link between abortion and low crime. Unemployment rate in 13 states exceeds 10 percent. --Zubin Jelveh
As a concept, so-called "say on pay" provisions--that is, non-binding shareholder votes--would seem to be only "slightly better than nothing" at limiting executive compensation. And this surely explains why Obama, Geithner, and other officials have come under fire for favoring this approach over something bolder. Yet it is possible to find some limited support for the effectiveness of say on pay.
Romer wants Fed to have ability to sell debt. Pushback from Congress on Fed as systemic risk regulator. Ezra Klein: The Green Lantern theory of financial regulation. Michael Lewis: Goldman Sachs rules the world. Ratings agencies escape stiff new regulation in Obama's plan. Opposing views on level of slack in the economy. --Zubin Jelveh
Tim Fernholz at The American Prospect argues that Paul Krugman and I are misunderstanding the intention of the "skin in the game" aspect of Obama's financial regulatory overhaul plan: "It's not intended, as Jelveh and Krugman propose, to keep big banks from selling away risk.
Paul Samuelson calls Greg Mankiw and Ben Bernanke part of a "very complacent group." Mankiw responds. Economists reaction to financial overhaul plan: WSJ, NYT Brookings tracks regional economic performance. Was Krugman a promoter of the housing bubble? Krugman responds. Chart of the day: support for gay marriage by state. --Zubin Jelveh
Yesterday, I wrote approvingly of the administration's plan to force loan originators to hold onto some of the risks they create via the mortgage securitization process. But Paul Krugman, channeling Princeton colleague Hyun Song Shin, makes the good point that big banks did hold onto plenty of risk during the subprime crisis. In fact, most of their problems stemmed from this tactic. Here is Shin: ...in reality, securitisation worked to concentrate risks in the banking sector. In a paper published this week (Shin 2009)), I argue that there was a simple reason for this.
Could foreign banks overthrow American financial preeminence? Soros wants banks to hold 10% instead of 5% of originated mortgages. No emergency federal aid coming for California. Should shrinking cities be bulldozed: Yes or no? MySpace lays off 30 percent of its staff. --Zubin Jelveh