Economy

Worth Reading
October 05, 2009

Did easy credit drive the three-decade rise in the price of basic necessities? Reactions to New Yorker's Larry Summers profile: Felix Salmon, Dean Baker, Noam, Brad DeLong, Ezra Klein, and Matt Yglesias Suriowiecki says the death of the consumer has been greatly exaggerated. Sweden's negative interest rates affect very few banks. How did prediction markets get the 2016 Olympics city so wrong?

Relitigating Summers and Bank Nationalization
October 05, 2009

There's been some teeth-gnashing in the liberal blogosphere over Ryan Lizza's New Yorker profile of Larry Summers, the general thrust of which is that he supposedly went too easy on Summers, particularly on the issue of bank nationalization. Here's Dean Baker over at his American Prospect blog: In terms of the bank bailout, some of us were worried that we were effectively taxing the whole country to support the rich bastards that put the economy in the toilet. Bank profits now stand at a record share of GDP and the bonuses at Goldman are as big as ever.

How the Recession is Accelerating Retirement Plans
October 05, 2009

While the impact of falling stock prices on older workers' retirement decisions has received a lot of attention this downturn, the more important driver of retirement rates appears to be unemployment, according to new research by Courtney Coile and Phillip Levine. (Sorry, pay-version only.) Using 30 years of data on changes in home and stock prices and labor market conditions, they conclude: When the unemployment rate rises, more workers between ages 62 and 69 retire, particularly those with less education.

What Health Care Reform Must Deliver This Year
October 05, 2009

This probably isn't the most original observation, but this graf from yesterday's Times piece on the state of play in health care reform really clarified some tactical imperatives for me:  While Congressional leaders say they want to curb the explosive growth of health costs, it is unclear whether the final bill will make a serious effort to do so.

Zero Hedge: The Daily Kos of Financial Blogs
October 04, 2009

I'm only an imtermittent visitor to the financial blog Zero Hedge. But between my occasional perusals, and Joe Hagan's interesting profile of the blog (and its proprietor Dan Ivandjiiski) in last week's New York magazine, I can't help thinking it has a lot in common with the political blog Daily Kos. Both have an aggressively anti-establishment, semi-conspiratorial worldview and are constantly fulminating against the powers that be (big Wall Street firms in the first instance, sellout Washington Democrats and their corporate overseers in the second).

Behind the Scenes with Larry Summers
October 04, 2009

Ryan Lizza has some fascinating biographical details in his must-read profile of Summers in the forthcoming New Yorker. First, he solves a mystery I'd chewed over but never figured out when profiling Summers myself:  M.I.T. hired him as a professor in 1979, then Harvard offered him tenure in 1982, when he was just twenty-seven. He was one of the youngest people to receive tenure in the university’s history.

A Question the Fed Needs to Answer Regarding Goldman Sachs
October 03, 2009

At the height of the financial panic last fall Goldman Sachs became a bank holding company, which enabled it to borrow directly from the Federal Reserve. It also became subject to supervision by the Federal Reserve Board (with the NY Fed on point)--hence the brouhaha over Steven Friedman’s shareholdings. Goldman is also currently engaged in private equity investments in nonfinancial firms around the world, as seen for example in its recent deal with Geely Automotive Holdings in China (People’s Daily; CNBC). U.S.

Worth Reading
October 02, 2009

Labor Dept. model might have undercounted job cuts by 824,000. Education sector job losses are biggest on record. Further evidence that monetary policy was tight late last year. More bank losses could be on the way. Why we can't create a liquid housing derivatives market.

The Unemployment News in Context
October 02, 2009

Despite the ugly headline numbers, there were at least a couple of rays of hope in other details of this morning's jobs report.

Greenspan on Derivatives--Still Not Getting It
October 02, 2009

So I was anticipating this post from the moment Felix Salmon sat down in front of me during Alan Greenspan's talk at today's Aspen Institute/Atlantic conference in Washington. And he doesn't disappoint, particularly on the subject of derivatives. Greenspan said that, yes, there were problems with credit default swaps (basically, insurance on bonds and bundles of mortgage-backed securities--the kind of thing that brought down AIG Financial Products).

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