Economy

What Will Bernanke Do With His Second Term?
September 20, 2009

Ben Bernanke has a great opportunity to lead the reform of our financial system. His standing in Washington and on Wall Street is at an all-time high, as a result of his bailout/rescue efforts. He is about to be reappointed with acclaim for a second term as chairman of the Federal Reserve’s Board of Governors. And he has a lot to answer for. Look, for example, at his speech of May 17, 2007, which discusses some of the problems in the subprime market and contains the memorable line: “Importantly, we see no serious broader spillover to banks or thift institutions from problems in the subprime ma

Worth Reading
September 18, 2009

Should the FDIC tap banks or taxpayers for needed funds? WaPo: the FHA's reserves will soon drop below required levels. Megan McArdle puts chances of healthcare bill passing at 75%. Could criminal charges be filed in probe of BofA-Merrill deal? NYT banking reporter Eric Dash's view on problems with Wall St. pay. Reviews of business and economics news apps for the iPhone.

How Much Will Wall Street Shrink?
September 18, 2009

Today's Journal story on the declining allure of a finance career has some interesting numbers: Although the biggest banks are showing a revived appetite for risk taking and certain exotic instruments such as credit derivatives, many of the vanished jobs aren't expected to be back soon. The White House Council of Economic Advisers expects finance and insurance jobs to decline to 4.1% of the work force in 2016 from 4.8% at the end of last year, a point at which many were already gone. ... Harvard's 2009 graduating class shows the shift in career directions.

Evan Bayh is Hyperventilating
September 18, 2009

I understand Evan Bayh's concern about the deficit--it is large, and eventually the bond markets (particularly our foreign creditors) might have something to say about it. But, for the moment, I think he needs to take a couple deep breaths. The big problem with his op-ed in today's Journal is that it doesn't deal directly with the biggest source of the recent spike in the 10-year deficit--namely, the worst recession since the 1930s.

Citigroup's Pandit: Making $100 Million Ain't Right
September 18, 2009

The Citigroup CEO apparently made the comment in response to a question at a 92nd Street Y event last night. The question was about his star commodities trader, Andrew Hall. Interestingly, the Journal piece adds this detail: "The response elicited murmurs from the audience, which included Citigroup employees." One wonders if those were murmurs of agreement or disagreement...

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.

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