October 29, 2010
With Republicans poised to sweep into office and obstruct Obama's agenda, is there anything he can do to revive the economy over the next two years? Last week I wrote about the possibility that we’re in a Japan-style recession—a rare form of economic disease that’s largely unresponsive to conventional remedies, like lower interest rates. This type of malady—the fashionable term is “balance-sheet recession”—tends to follow a collapse in the price of housing or stocks, at which point people become so preoccupied with paying down debt that they refuse to borrow even on super-attractive terms.
A Bona Fide Social Security Fix
October 28, 2010
[Guest post by Noam Scheiber:] I'm of the view that it's a bit futile to worry about Social Security's long-term actuarial balance before you've figured out what to do about Medicare and Medicaid, whose contributions to our deficits over the next several decades are far, far bigger.
The Semiotics of Crazy Eddie
October 27, 2010
[Guest post by Noam Scheiber:] The linguistics nerds over at The Economist have launched an entire blog devoted to the subject--called "Johnson," of course--netting us this fascinating insight: THE idea of "phonetic symbolism"—specifically a link between sounds and perception of size—appeared to me for the first time in Steven Pinker's Language Instinct. Some vowels are "high" in phonetic terminology, like [i] (as in "sweet"). Others are "low" (like [o]).
Why No Geithner Greenbacks Yet?
October 25, 2010
[Guest post by Noam Scheiber:] Interesting bit of trivia from a blogger named "madhedgefundtrader," posted on the iconoclastic finance site Zero Hedge (via Politico's Morning Money): Before he left, I pulled out all the cash in my wallet and pointed out to Geithner that while I had bills signed by previous Treasury Secretaries Larry Summers, Paul O’Neil, and Robert Rubin, I lacked one with his illegible scrawl. Did he have any which he could exchange with me?
Consumers on Strike, An Illustration
October 22, 2010
[Guest post by Noam Scheiber:] I'm a little late coming to this, but the indispensable Mike Konczal has a great post pivoting off of the piece I wrote earlier this week on consumer spending, and what it tells us about the kind of recession we experienced and the prospects for recovery. In the piece, I discuss the work of Japanese economist Richard Koo, who argues that in so-called "balance-sheet recessions," which follow the bursting of asset-price bubbles, consumers and businesses become preoccupied with paying down debt.
How to Fix the Deficit
October 01, 2010
The United States is in a fiscal bind. Last week saw the release of two reports which vividly illustrate the policy dilemma we face—but they also point to a strategy we could use to overcome it. The first appeared on September 28, when CBO Director Doug Elmendorf presented an analysis of our fiscal policy choices before the Senate Budget Committee. Among his key findings: Cutting taxes is good for the economy in the short-term but bad in the long run.
A Patch of Economic Sunshine
September 30, 2010
Economic conditions remain quite bad, and I don’t want to oversell the importance of a few data points, but it’s worth noting some positive news. Here are three positive developments, as reported by CNN Money: 1. Despite the stomach churning month, stocks ended September with strong gains. The Dow jumped 7.7%, the biggest September gain in 71 years.
News Flash: Women Still Make Less Than Men
September 29, 2010
Everybody knows that women make less money than men. But is that because of discrimination? The lifestyle choices they’re making? Some other factors? A new GAO report offers some new, intriguing answers. The study focuses strictly on people who occupy managerial positions. While the pay gap has narrowed slightly over the years, the GAO finds, women in these positions still make approximately 20 percent less than men do: By itself, this statistic doesn’t tell us that much. And it doesn’t prove that there is widespread, overt discrimination against women.
A Possible Summers Successor and Her (Potential) Citigroup Problem (UPDATED)
September 24, 2010
The early frontrunner to succeed Larry Summers at the National Economic Council is Anne Mulcahy, according to various reports. Don’t feel bad if you’re wondering who she is or what her appointment would mean—while the former CEO of Xerox is well-known in the business community, there’s not much to tell about her life in politics.
Thrifty’s Not So Nifty
September 22, 2010
Few people have heard of the “paradox of thrift,” a very old economic theory that was revived, and dusted off, and contextualized, by John Maynard Keynes and has lately reappeared as a shuttlecock in the battle between Left and Right over stimulus spending and other responses to the economic crisis.