Economy

Government Job Losses: A Mystery (Solved)
October 02, 2009

There's a bit of a riddle in today's unemployment release from the Labor Department. The release notes that government payrolls were down 53,000 in September, about one-fifth of the total jobs lost last month (which helped drive the unemployment rate up a tenth of a point to 9.8 percent). Now, as it happens, the cracker jack economists at Goldman Sachs actually anticipated this development yesterday, en route to almost perfectly nailing the overall job-loss figure.

Worth Reading
October 01, 2009

Greenspan says taxes must rise. Bernanke backs council of regulators proposal. Gwyneth Paltrow offers some investment advice. Fiscal multipliers in U.S. have dropped sharply since 1980. Leonhardt: Let's stop arguing about the opt-out revolution.

Is Bernanke Making the Wrong Concession?
October 01, 2009

As I've said before, I admire the Fed chairman's political touch, which he demonstrated again today by making a key concession to Fed critics and skeptics: Apparently Bernanke is now willing to share power for keeping an eye on systemic risk with a council of regulators. It's the kind of thing people like FDIC chairman Sheila Bair have proposed, so that the Fed doesn't end up cornering the market on financial regulatory authority. I just wonder if this is the right concession to make. For one thing, I'm not entirely sure how a council of regulators is supposed to work.

Worth Reading
September 30, 2009

A philosopher of science critiques the Chicago School and sides with Krugman. Why Greg Ip is a good economics journalist. Robert Shiller thinks home prices will stagnate for 5 years. Plus, what's wrong with Shiller's financial innovations? Krugman and DeLong have good thoughts on policy at the zero bound. An attempt at peer-review of working papers on the web.

More Evidence Against Oil-Price Manipulation
September 30, 2009

An oft-repeated argument against the notion that speculation drove the recent price-spike in oil is that we never saw an increase in oil stockpiles. The logic goes like this: If prices are increasing, then buyers of oil would cut back while producers would pump more to sell at the higher price. Who buys the extra supply? Speculators who hope that prices will go even higher. This process would involve the stockpiling of oil by speculators/manipulators.

The Looming Deficit Disaster, Modeled
September 30, 2009

Yale's Ray Fair, well-known for his economic model predicting the outcome of presidential elections, has a new forecast out on the macroeconomic effects of large budget deficits -- and it's not pretty: A depreciation of the dollar leads to inflation, as expected, but this is of only modest help regarding the debt problem. It does not appear that the United States can inflate away its debt problem. The picture is worse regarding output if there is a flight from U.S. stocks as well as the dollar. Personal income tax increases and transfer payment decreases have similar effects on the economy.

Worth Reading
September 29, 2009

Joe Stiglitz wants limits on regulatory discretion. Public option dies in the Senate Finance Committee. China's trade surplus is slowly shrinking. S.E.C. watchdog wants overhaul of agency's practices. Price-to-rent ratios return to earth.

Has the Market Rally Run Its Course?
September 29, 2009

A potentially telling data point from today's Journal: But some investors don't expect the gains to continue. Barry James, president of James Investment Research in Alpha, Ohio, worries about the recent wave of selling by corporate insiders. Regulatory filings show executives have recently unloaded about $115 in stock in their own companies for each $1 in purchases, a pace unequaled since the market high in October 2007. "Those folks tend to be right in terms of getting out of harm's way," said Mr.

How Legitimate Is the G20?
September 29, 2009

Strong advocates of our new G20 process are convinced that it will bring legitimacy to international economic policy discussions, rule-making, and crisis interventions. Certainly, it’s better than the G7/G8 pretending to run things--after all, who elected them? But who elected the G20? The answer is: No one. And, in case you were wondering, there is no application form to join the G20 (although you can crash the party if you have the right friends, e.g., Spain). The G20 has appointed themselves as the world’s “economic governing council” (to quote Gordon Brown). Is this a good idea? Not reall

Did Weak Lending Standards Really Drive the Crisis?
September 29, 2009

Many commentators assume so. But the role of declining lending standards may be overstated. In a new Atlanta Fed paper, Kristopher Gerardi, Adam Shapiro, and Paul Willen take a look at Massachussets home prices over two housing cycles from 1989 and 2008 and conclude that falling home prices (rather than weak underwriting standards) played the key role in the crisis: [H]ad prices not fallen, we would simply not have had a major foreclosure crisis, regardless of whether lenders had lowered underwriting standards in 2003 and 2004.

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