It took me many years to understand the phrase “moral hazard.” It’s a fundamental tenet of economics, usually used to explain that, since consumers are untrustworthy, businesses need to charge them more.* It was finally cleared up for me in the midst of a presentation last year about how it’s a “moral hazard” issue that […]
Mish sends us to “Track the Money,” recovery.gov’s breakdown of where funds have been sent and spent. He’s not happy, but I suspect he’s suffering the Jared Bernstein Problem: only looking at one side of the equation. But—and this is the key “but”—the reason it is right to do that is that ARRA money has […]
AIG is bankrupt, but Manchester United still wears their logo. However, when Dutch bank DSB Bank NV filed bankruptcy, Stephen Colbert had to step in to sponsor U.S. Speedskating? Maybe the Dutch understand Sports Economics and the Americans don’t?* *J.C. Bradbury, Dennis Coates, Skip Sauer, to name just three, would dissent from the last statement. […]
Via Greg Mitchell’s Twitter feed, lying isn’t just for the IB branch any more: Goldman declined for three years to confirm their suspicions that it had bought their mortgages from a subprime lender, even after they wrote to Goldman’s then-Chief Executive Henry Paulson — later U.S. Treasury secretary — in 2003. Unable to identify a […]
The question: How much was credit being funneled away from all other sectors in the economy? The answer: Very little if any. Neither the general consumer lending: nor the specific Real Estate lending: appears to run in a different direction that Business Loans, except possibly, in the latter case, in late 2003 and early 2004. […]
(Data via Yahoo! Finance)
One of the most notable things about ski trips to the States from Canada was that they offered “U.S. medical insurance”—a buy-in that cost around the same as a lift ticket if you wanted to ski Stowe instead of Tremblant. One of the scariest moments in Sicko is when the Canadian relatives note that they […]
Bruce Bartlett posts a note that could have come from me (but, for reasons that will become obvious, did not: During the 8 Reagan years, when marginal [tax] rates were sharply cut (but deficits were substantial), equities on the NYSE and the S & P 500 about doubled. During the 4 Bush 41 years, when […]
Ken Houghton, having realized there is still a Commercial Paper market, looks at one implication of it. One of the things that gets ignored in all the fussing about government debt is how small it is by comparison to corporate debt. The shortest-term debt, Commercial Paper, can be very interesting. With a maturity that is […]
Dr. Black starts digging into the question why so many Georgia-based banks fail. The picture painted isn’t pretty: The review also contains a photo of a planned 238 townhouse project that the bank financed for $5.6 million in 2007 even as the real estate market was softening. By September 2008 about three quarters of the […]