Economy

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).

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.

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