finance

UPDATED: Rockefeller Says "No Way" on Baucus Framework
September 15, 2009

Senator Jay Rockefeller, speaking Tuesday afternoon on a conference call co-sponsored with the Campaign for America's Future: I have sat besides Max Baucus for 22 years on the Finance Committee. ... I'm probably one of his best friend among Democrats. But I cannot agree with him on this bill. ... There is no way in present form I will vote for it.

Obama and the Ghost of Louis Brandeis
September 15, 2009

President Obama’s speech yesterday was disappointing. As a diagnosis of the problems that let us into financial crisis, it was his clearest and best effort so far. He didn’t say it was a rare accident for which no one is to blame; rather he placed the blame squarely on the structure, incentives, and actions of Wall Street. But then he said: Our regulatory reforms will fix that. This is hard to believe. And even the president seems to have his doubts, because he added a plea that--in the meantime--the financial sector should behave better. The audience was composed of our financial elite, but

What You Need to Know About the State of Our Financial System
September 14, 2009

Financial markets have stabilized--people believe that the U.S. and West European governments will not allow big financial institutions to fail. We have effectively nationalized any banking system losses, but we’ll let bank executives enjoy the full benefits of the upside. How much shareholders participate remains to be seen; there will be no effective reining in of insider compensation (my version; Joe Nocera’s view). Small and medium-sized banks, however, will continue to fail as problems in commercial real estate continue to mount.

Misplayed
September 10, 2009

After calling an extraordinary special session, the Roberts Court is now debating whether to reverse decades of cases that allow the government to restrict the campaign spending of corporations. Defending the regulation of corporate speech, Elena Kagan, in her first argument on behalf of the Obama administration, made a strategic concession.

Touching the Third Rail of Housing Policy
September 09, 2009

Ed Glaeser posted in Economix yesterday about the lessons that the housing crash imparts for housing policy--including the seemingly untouchable mortgage interest deduction. Now that home prices seem to be moderating, the piece provides a vivid reminder of how steep the price curve was, before and after the crash.

Low Expectations for the G20 and IMF
September 08, 2009

As we wade through a long line of international economic meetings--G20 ministers of finance last week, G20 heads of government in Pittsburgh coming up, IMF-World Bank governors meeting in Istanbul early October (and all the associated “deputies” meetings, where the real work goes on)--it seems fair to ask: Where is regulatory reform of our financial system heading? Long documents have been produced and official websites have become more organized. Statements of principle have been made. And the melodrama of rival reform proposals has reared its head: continental Europeans for controlling pay

Good Finance Gone Bad
September 08, 2009

As the Lehman anniversary approaches, defenders of the financial sector struggle into position--partly in response to your comments (also here). They offer three main points: We need finance to make the economy work. Financial innovation delivers value, although it’s not perfect (but what is?). Don’t kill the goose that laid the golden egg. Point #1 is correct, but this does not necessarily mean we need finance as currently organized. The financial sector worked fine in the past, with regard to supporting innovation and sustaining growth. Show me the evidence that changes in our financial str

Is Krugman Too *Optimistic* About the Economics Discipline?
September 07, 2009

So I think I agree with pretty much every point Paul Krugman makes in yesterdays' Times magazine about where economics went off the rails. Including his big prescriptive point: Economics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system. If the profession is to redeem itself, it will have to reconcile itself to a less alluring vision — that of a market economy that has many virtues but that is also shot through with flaws and frictions. The good news is that we don’t have to start from scratch.

Rocking Roberts?
September 07, 2009

WASHINGTON -- President Obama's health care speech on Wednesday will be only the second most consequential political moment of the week. Judged by the standard of an event's potential long-term impact on our public life, the most important will be the argument before the Supreme Court (on the same day, as it happens) about a case that, if decided wrongly, could surrender control of our democracy to corporate interests. This sounds melodramatic. It's not.

The Danger of Rejecting Compromises
September 03, 2009

Earlier this year, a group of former Senate Majority Leaders--Howard Baker and Bob Dole, along with Tom Daschle--released a template for bipartisan health reform. They did so through the Bipartisan Policy Center, which they'd established along with George Mitchell (who subsequently left to join the Obama administration). The reaction from liberals was lukewarm, at best. And I shared the ambivalence.

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