Robert Waldmann Barry Ritholtz argues that the problem with mortgages was underwriting standards and not securitization. He appeals to the very great authority of Monty Python. Click the link. Ritholtz seems not to be familiar with this new idea in economic theory called “Nash equilibrium”. Over -rated yes. Totally irrelevant not so much. One can […]

Floyd Norris cites John C. Dugan, the man whose agency was charged with regulating AIG Financial Products in the NYT: [T]hey believe that the banking system on its own is unlikely to have the ability to provide enough credit to sustain an economic recovery in the United States. Gosh, really? Norris quotes Dugan: “We need […]

Even during the last “jobless recovery,” people did not continue to become discouraged. Things have changed.

While I applaud the cautious optimism of Spencer and Tom, I’m more inclined to quote Joseph Brusuelas: [T]he January payrolls added a dollop of Zen like logic to a recovery that is shaping up like no other. An additional 111,000 workers entered the labor force, yet the unemployment rate fell to 9.7% while private sector […]

Robert Waldmann Matthew Yglesias discusses the financial crisis and the idea of causation. He shows that he was a philosophy major. I’m delighted. The question is whether the answer to the question “What caused the financial crisis?” is of the form “A, because if A had not been true, then there wouldn’t have been a […]

Was 2009 a great year to be a bank? The headlines all say so. (The 140 U.S. banks that were closed by the FDIC last year may disagree some.) But, as Isabelle Kaminska of Alphaville notes, very little of the gains posted for last year came from anything related to talent: Deutsche Bank reported net […]

Via my usual source, Citi has launched a blog. Kids, don’t try this at home. The highlight is “Help Us Build a New Citi”: Join the conversation about reform, recovery and responsible finance.Tell us what’s on your mind. Comments may be as many as 200 characters. Suggestions for comments welcome in comments here.

For those who were thrilled by the positive general prospects in Rebecca’s post, the WSJ presents words to die/foreclose by: If that seems at odds with the economy’s recent strength, keep in mind that the unemployment rate is usually one of the last places recovery shows up. Many of us are having trouble forgetting that, […]

Brad DeLong and John Cochrane agree on something. I must dissent. Delong and Cochrane agree that “The underlying decline in wealth from the housing bust was … around $400 billion. …” Indeed, relative to the size of the economy the losses during the crash of the dot-com bubble were four times as large. I object […]

Go read: If you’re only reading one post, see FT Alphaville, which incorporates and expands upon… Tom Adams and Yves Smith’s posting at Naked Capitalism discussing the document and the reality of the situtation. the document itself is available from either The Long Room or the Huffington Post. If the FRB of NY really believed […]