What Was the Job of the Banks in 2009?

UPDATE: In this context, Dr. Black catches Jamie Dimon expressing what is at best ignorance: However, [Dimon] cautioned, until the market meltdown “you never saw losses in these products, because home prices were going up.” All that research in 1984 and 1990 was for naught, apparently. I’m still away (things are better, but still not […]

I’m certain that everyone is waiting with bated breath to see if my five-part “NOT totally clueless” series is completed in five parts or if it gets extended again, but a couple of personal events have intervened, so I’ll be away for a few days. Enjoy the other performers, and don’t forget to tip your […]

Via (what else?) Alea’s Twitter feed, John Taylor defends himself against Ben Bernanke: “The evidence is overwhelming that those low interest rates were not only unusually low but they logically were a factor in the housing boom and therefore ultimately the bust,” Taylor, a Stanford University economist, said in an interview today in Atlanta. It’s […]

Note: I planned to finish this here, but the post became far too long, and splits quite well.  What follows is applications of economic theory and background material on financial decisions. To be clear, I hate the phrase “casino capitalism.” It’s rather unfair to casinos, which know how to do risk management: make an offer […]

Edmund L. Andrews (most recently of the NYT and being pilloried by Megan McArdle for having the gall to marry a woman whose previous marriage ended in bankruptcy) has joined Andrew Samwick, Stan Collender, Pete Davis et al. over at Capital Gains and Games. His first post, “Hopes of a Chastened Capitalist” is here.

Pete Davis: Treasury Secretary Hank Paulson initially sold Congress in the fall of 2008 on emergency intervention to purchase “toxic assets,” but quickly reversed course in favor of direct capital injections. Those favored financial institutions revived more quickly than most thought possible and most of those injections have already been paid back. However, most of […]

UPDATE: CR appears to agree with me, even as he raises another point: Bernanke used data from other countries to suggest monetary policy was not a huge contributor to the bubble … however, Bernanke didn’t discuss if non-traditional mortgage products contributed to housing bubbles in other countries. This would seem like a key missing part […]

This is taking longer than it should. For now, here is a “teaser” graphic, which I suspect is worth much more than 1,000 words: Meanwhile, other (mostly related) thing you may want to read: Brenda Rosser find that everything new is old again. Steve Randy Waldman tells the truth about banks, and Shames the Devil, […]

I gave a guest lecture in Intermediate Macro last year. Normally, I try not to do such things, but I was staring at some data and the offer came at the same time the data started making sense, so I said yes. I gave them a presentation on the similarities and differences between Economics and […]