Economy

China's More Exotic Demands
September 18, 2009

As Noam explains in his piece about the U.S.-China Strategic & Economic Dialogue (S&ED), Beijing has been rooting for major alterations to the U.S. health care system—especially ones that reduce long-term pressure on the federal budget.

Maybe Securitization Didn't Cause the Crisis
September 18, 2009

Soon forthcoming in the top-ranked Quarterly Journal of Economics is a very well- received paper by four economists with convincing evidence of what many believe was the primary cause of the subprime boom and bust: That securitization took away the incentive for lenders to properly vet borrowers. But there's some new evidence questioning the paper's findings.

Worth Reading
September 17, 2009

Surowiecki on the shortcomings of the Baucus healthcare bill. In monetary policy, it's better to prick a bubble that clean up after it pops. Cool interactive graphic from Economy.com tracking the recovery by state. Ezra Klein interviews the CBO's Doug Elmendorf. A case against restricting bankers' bonuses.  

Is the CBO Biased Against Health Care Reform?
September 17, 2009

A number of CBO-watchers were asking that question when the agency started scoring health care bills a few months back. As Washington and Lee law professor Timothy Stoltzfus Jost put it in Politico: It is much easier to score costs than cost-savings. Legislation pending in both the House and Senate in fact includes state-of-the art proposals that many health policy experts do believe will result in real savings, as the CBO recognizes.

The Real Banker Boondoggle
September 17, 2009

Laurence Grafstein: What financiers owe the public.

Is Treasury Courting Inflation?
September 16, 2009

Deborah Solomon and Jon Hilsenrath at the WSJ inform us that, in order to keep from hitting the $12.1 billion trillion debt ceiling, the Treasury Department is winding down a one-year-old program it created to borrow funds on behalf of the Fed: Since last year, the Treasury has been selling special short-term securities and placing the proceeds in an account at the Fed.

Worth Reading
September 16, 2009

What recession? Wages are rising. (Or are they?) First firm to participate in toxic loans progam is selected. Lehman owes about $2 billion in back taxes. Barclays shows that accounting hijinks are alive and well. Scott Sumner: the Fed caused the crisis by printing too little money. Felix Salmon gets profiled.

TNRtv: Another Wasteful Program That Just Won't Die
September 16, 2009

Simon Johnson weighs in on the debate over whether Congress should renew the tax credit for first-time home buyers, warning that special interests may

Call of the Wolf
September 16, 2009

Long before Martin Wolf became the chief economics columnist for the Financial Times, he wrote the newspaper letters--lots and lots of letters. It was the early 1980s, the height of the Thatcher era, and Wolf was running research at a think tank in London that was sympathetic to the government's pro-trade agenda.

The Paradox of the Paradox of Thrift
September 16, 2009

Keynes' paradox of thrift holds that if everyone tries to save at the same time during a recession, then the economy continues to contract due to a fall in demand. This sends incomes lower and gives people less money to sock away, so that total savings actually fall instead of rising. The implication for our times is that a new era of frugality might not be what the economy needs. But in a new IMF paper, Yasser Abdih and Evan Tanner argue that Keynes' paradox might not apply after a financial crisis. In normal times, companies can finance investment through their own savings.

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