As the late Allison Snow-Jones noted, economics depends on working mathematics. Mathematics, in turn, depend on the conditions being described correctly. If I build a model in which two things are independent, they have to be independent for my model to work. Or, to quote a quoting: Many months ago, I quoted the brilliant Janet […]
Via Benzinga, L. Randall Wray notes more of the same for socializing the costs of our financial woes: In truly depressing news, Secretary Treasury Geithner announced he was funneling $2.8 billion more bail-out funds to Bank of America. In the deal, Fannie and Freddie would agree to abandon claims that they had been sold trash […]
With a hat tip to Rebecca’s post below, normalized borrowing growth in several sectors over the past 25 years. (Source: FRB Flow of Funds data) Yes, there are three very similar (shades of blue) lines—but they are all household and non-profit data. (The growth in “credit market instruments” is, presumably, primarily driven by the non-profit […]
The readers of the Fiscal Times learn what everyone looking at the alphabet-soup of back-door taxpayer theft (or, as Ben Bernanke calls them, facilities) knows: There are many ways policy could have been improved; providing more help for state and local governments is high on the list, but I’ll focus on another way: using fiscal […]
LA Times (via John Chait). The projected cost of the $700-billion financial bailout fund — initially feared to be a huge hit to taxpayers — continues to drop, with the nonpartisan Congressional Budget Office estimating Monday that losses would amount to just $25 billion. That’s a sharp drop from the CBO’s last estimate, in August, […]
Not certain this link will work, but at Interfluidity, SRW replies to Karl Smith, closing with a sentiment with which I am very much in sympathy: It is not technocratic economists who will win the day and pull us out of our cul-de-sac, but angry Irishmen and Spaniards who challenge, on moral terms, the right […]
Echoes of Japan, echoes of the Great Depression. One of the few economists who knows history closes a post by presenting the proper context for the choices: A quick exit [by Ireland, from the Euro] may still be better than a decade of slow, grinding deflation combined with Zombie banks and Zombie household balance sheets […]
Went to Massacghusetts for the weekend, where I learned that Martha Coakley supports child rapists* and Scott Brown (R-MA Sen.) is a decent legislator who stands by his convictions, including his opposition to the Financial Services Reform Act, which principled action he takes because the act institutionalizes Too Big to Fail. (This is also Russ […]
“Liquidity” is another magic word. I like it rather less than “friction.” In the debate on financial regulatory reform opponents of tight regulations use the word liquidity as a magic spell which, they hope, will make all inconvenient evidence and arguments go away (no links my claim is like saying the Sun emits light). The […]
NBER paper of the day: We analyze asset-backed commercial paper conduits which played a central role in the early phase of the financial crisis of 2007-09. We document that commercial banks set up conduits to securitize assets while insuring the newly securitized assets using credit guarantees. The credit guarantees were structured to reduce bank capital […]