Economy

Waiting For The Fed's Next Apology
August 14, 2009

In November 2002, Ben Bernanke apologized--for the Fed's role in causing the Great Depression of the 1930s. "I would like to say to Milton [Friedman] and Anna [Schwartz]: Regarding the Great Depression. You're right, we did it. We're very sorry.

Sachs Appeal
August 12, 2009

Should Tim Geithner's Wall Street consigliere make us queasy?

Mind the Gap
August 12, 2009

Should we care about economic inequality? That question is the subtext for most debates in American politics. It just remains below the surface because the party that thinks we shouldn't care about inequality--I'll give you one guess--has an endless string of obfuscations ("death tax," "small business," "tollgate to the middle class") to avoid admitting that it doesn't care about inequality. There are, however, some real reasons not to care about income inequality, and right-wingers who don't have to run for public office are happy to admit it.

The Real Reason China Will Surpass Us
August 11, 2009

The usual concern about the U.S.-China balance of economic and political power is couched in terms of our relative international payments positions. We've run a large current account deficit in recent years (imports above exports); they still have--by some measures--the largest current account surplus (exports above imports) even seen in a major country. They accumulate foreign assets, i.e., claims on other countries, such as the U.S. We issue a great deal of debt that is bought by foreigners, including China. There are some legitimate concerns in this framing of the problem--no country can in

Credit Conditions In The Absence Of Consumer Protection
August 10, 2009

Even some of our most sophisticated commentators doubt a link between consumer protection and any macroeconomic outcomes. Consumer protection, in this view, is microeconomics and quite different from macroeconomic issues (such as the speed and nature of our economic recovery). Officially measured interest rates are down from their height in the Great Panic of 2008-09 and the financial markets, broadly defined, continue to stabilize. But are retail credit conditions, i.e., the terms on which you can borrow, getting easier or tougher? On credit cards, there's no question: it's getting more expen

The Future Of Sushi: Farms?
August 05, 2009

Is the end of sushi upon us? It may well be. Bluefin tuna stocks all over the world are on the verge of collapse, thanks to overfishing. The World Wildlife Federation has estimated that Northern bluefin could get wiped out within three years, while the Southern bluefin is critically endangered.

Who's Afraid Of Consumer Financial Protection?
July 28, 2009

The debate over re-regulation of the financial sector has finally, and irreversibly, turned partisan. This helps define issues in ways that may be more familiar and thus easier to understand. In the blue corner we have Treasury Secretary Tim Geithner. Secretary Geithner's overall banking policy continues to be problematic, and his broader re-regulation effort is hampered by all the free passes he gave to bank CEOs earlier this year. But on consumer protection he has the right message and he delivered it forcefully to Congress last week: we need a Consumer Financial Protection Agency (CFPA) and

Secretary Geithner's China Strategy: A Viewer's Guide
July 27, 2009

On Monday and Tuesday of this week, Treasury Secretary Geithner--and Secretary of State Clinton--meet with a high-level Chinese delegation. According to official previews (i.e., the apparent contents of background briefings given to wire services), the economic topics are China's concerns about the value of the dollar (i.e., their investments in the U.S.) and the amount of debt that the U.S.

After Peak Finance
July 24, 2009

There are three kinds of "bubbles"--a term often used loosely when asset prices rise a great deal and then fall sharply, without an obvious corresponding shift in "fundamentals." A short-run bubble. Think about 17th century Dutch Tulip Mania: spectacular, probably disruptive, but not a major reason for the decline of the Netherlands as a global power.  A distorting bubble. In this case, the increase in asset prices contributes to a reallocation of resources across sectors. Think of the Dot-com Bubble: fortunes were made and lost, the collapse was scary to many, and--at the end of the day--you'

Stimulus Vs. Bailouts?
July 17, 2009

Last week, the Treasury Department quietly announced it was moving ahead with plans to purchase toxic assets from banks, but in scaled-back form. To my colleague John Judis, this must have been welcome news. For months now, he and I have debated whether President Obama’s efforts would be best spent fixing the financial sector or reviving spending by consumers and businesses.

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