The Stash

Via Matt Yglesias, I see that Alec MacGillis had an interesting piece on this question in yesterday's Washington Post. There are a variety of ways the administration could target employment directly, of course, from a WPA-style federal jobs program to tax credits that subsidize hiring. Zubin and Kevin Drum have pointed out some problems with proposals near the WPA end of the spectrum. A more feasible approach might be a policy the Germans put in place, which apparently happens on a smaller scale in a few U.S.

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Here's some more evidence against the declining lending standards theory of the crisis -- and support for the claim that it was the design itself, or existence, of subprime mortgages that played a seminal role in our housing woes. In a new working paper, Dean Corbae and Erwan Quintin investigate the impact of the financial innovation that was the subprime mortgage.

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Worth Reading

John Reed apologizes for creating Citigroup. What Europe is getting right in tackling unemployment. Public works projects successful in rural India? Study: Pork-barrel spending a symptom, not cause, of budget woes. Did Malcolm Gladwell cause Lehman's collapse?

So yesterday I posted an item complaining about the line of argument that attributes Tuesday's election results to the fact that Democrats had strayed too far from the center, had done too much to quickly, were expanding government too far, etc., etc. I argued that it was much more plausible that voters--particularly the independent voters who decide elections--were just pissed off about the economy.

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Paul Krugman wants lawmakers to create a modern version of the Works Progress Administration, an important New Deal-era agency which put millions of people to work on public infrastructure projects: A question I’m occasionally asked at public events is, why aren’t we creating jobs with a WPA-type program? It’s a very good question. ... You can make a pretty good case that just employing a lot of people directly would be a lot more cost-effective; the WPA and CCC cost surprisingly little given the number of people put to work.

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You've probably already heard the grim news: The economy shed another 190,000 jobs last month, driving the unemployment rate up to 10.2 percent (though the job-loss total wasn't so far out of line with what economists expected). But here's the number I'm seizing on: 5.594 million. That's the number of people who've been unemployed for 27 weeks or more, a horrifically large number of people to be struggling through such oppressive circumstances.

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A banking industry lobbyist I spoke with this evening alerts me to a fascinating development in the House Financial Services Committee: Pennsylvania Rep. Paul Kanjorski is about to introduce an amendment to the systemic risk bill moving through the committee (see my discussion here and here) that would give regulators the power to break up too-big-to-fail firms. The details are a little unclear--as it stands, the current bill would give the Fed some vague powers in this vein. But the soon-to-be Kanjorski amendment appears to go much further, and the banks are freaking out about it.

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Worth Reading

Arnold's hidden F-You message unlikely to have happened by chance. Union roll declines are not just a U.S. phenomenon. Should NYT dump its sports section? The legal market in human cadavers. Treasury's treating bloggers like journalists.

One of the most frustrating consequences of an Election Day like Tuesday is that it invariably (if fleetingly) transforms moderate politicians with no particular insight into the dynamics of public opinion into all-knowing sages. More to the point, it elevates their perfect-for-every-occasion view of politics, which says that if your party suffers a setback, the reason must be that it was too far to one side of the political spectrum, and so the answer is obviously to move back to the middle.

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Worth Reading

Eugene Fama calls the premise of Justin Fox's book "fantasy". Why did Volcker walk out of his Bartiromo interview? Dirk Bezemer: Why financial sector debt is a dead-end for the economy. Treasury to issue 30-year inflation protected bonds. Felix Salmon can't see a painless way out of the bubble we're inflating. The Great Crash ... in nominal spending.

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