Aliyah and Interest Rates
August 25, 2009

Aliyah is the at once mystical and practical "going up" to Zion. Stanley Fischer is one of the very many men and women who have made that journey and are, thus, olim. It was Bibi Netanyahu who, as minister of finance in Ariel Sharon's government, summoned him to the service of the Jewish state and turned around his whole life.

The Three Faces Of Ben Bernanke
August 25, 2009

Ben Bernanke will be nominated for a second term as chairman of the Federal Reserve. But which Bernanke are we getting? There are at least three.  The Bernanke who led the charge to rescue the US (and world’s) financial system after the Lehman-AIG collapse.  If you accept that the choice from late September was “Collapse or Rescue,” this Bernanke did a great job. The Bernanke who argued for keeping interest rates low as the housing bubble developed. This Bernanke was part of the Greenspan Illusion--the Fed should ignore bubbles and “just clean up afterwards.” Is that still Bernanke’s view?

The Logic of Reappointing Bernanke
August 24, 2009

The big news from Martha's Vineyard is that Obama is appointing Ben Bernanke to a second term as Fed chairman. I've explained before why I think this is a good idea--Bernanke has been creative, even highly unorthodox, at precisely the moment when the economy demanded these qualities from the Fed, and when a conservative, by-the-book approach would have likely sent us into a depression.

To Love, or Blame, the Fed?
August 24, 2009

Ben Bernanke's moves at the Fed have rightly attracted much praise in the last month after better-than-expected GDP and unemployment reports pointed to the end of the Great Recession. The latest signs of Fed-Love come by way of John Maggs at the National Journal's econ blog, which points to a new paper arguing for a "Fed-like approach" to budget-making. Maggs asks: "Should we and could we create a Fed for the budget?" (The paper is a highly-recommended read.) Of course, Fed criticism hasn't abated that much. The latest evidence comes from this weekend's Jackson Hole macro-econ get-together.

Worth Reading
August 24, 2009

Union official to lead NY Fed board of directors. U.S. bond yields point to sluggish recovery. Economists disagree on how fast the economy will--or can--grow. Israel's central bank the first to raise rates. Urban Institute: No evidence that U.S. healthcare is #1 in the world.    

When Did Innovation Start Hurting Society?
August 24, 2009

Simon Johnson, professor at MIT's Sloan School of Management, senior fellow at the Peterson Institute for International Economics, and co-founder of B

Madoff Has Cancer, Too. Why Not Release Him or At Least Send Him Home on House Arrest?
August 24, 2009

The New York Post and Reuters both report not exactly that Bernie Madoff has cancer. But that he's told his fellow inmates that he has cancer, pancreatic cancer, at that. Which means that, if the tale is true, he'll be a goner soon, very soon. Unless there's a medical miracle, as sometimes there is even in such terrible afflictions of the pancreas. Now, a federal judge has sentenced Madoff to 150 years in federal prison, a sentence--as is obvious--he cannot possibly serve. So the master Ponzi schemer is now in the hands of the president as top man in the federal penal system.

Obama, Micromanaging, and the WSJ Revisited
August 24, 2009

A reader e-mailed just before I went on vacation to quibble with my take on the Journal's "A President as Micromanager" story from two weeks ago. In my item, I argued that the piece's premise was off-base--the Journal was confusing micromanaging with craving detailed information on which to base incredibly consequential decisions. So far, so good. But then I went on to say the piece "sprinkles the micromanager charge liberally throughout," which isn't true.

The Burden Is on the Inflation Hawks
August 24, 2009

The Wall Street Journal has a useful piece up today about the historical analogy that looms large in the minds of administration economic officials: 1937, the year the Fed, FDR, and Congress prematurely tightened economic policy and sent the economy back into a deep recession after several years of recovery. What I always find remarkable about these discussions is that proponents of early tightening essentially (sometimes explicitly) argue that the expected loss from too much inflation (that is, the loss weighted by the probability of it happening) is greater than the expected loss from a doub

Lifting the Shadow Off the Tax System
August 20, 2009

The fact is that it did not happen until Barack Obama became president. It was a standing offense to American tax justice that probably hundreds of thousands of our very rich countrymen brazenly avoided the reach of the Internal Revenue Service simply by transferring (much of) their wealth to foreign banks in Switzerland and about 15 other countries, which protected the identities of these depositors by their laws. We know why this long-time structural injustice was of no interest to either of the Bush administrations. Let's say roughly that both George H.W. and George W.