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Levy Rivers's Library tagged economy →  View Popular

04 Apr 09

Our Epistemological Depression — The American, A Magazine of Ideas

  • This time, too, there is an underlying commodity bubble, namely in housing. But it has had much wider ramifications, because financial institutions have become interconnected in two unprecedented ways. First, once distinct financial services became interconnected: banking, credit, insurance, and the trading of derivatives have become interlinked because they are conducted by the same companies. Second, financial institutions are more connected across national borders, so that there are entities across the globe that invested in toxic American-made instruments and are suffering as a result (including municipalities in Norway that invested tax revenues in American collateralized debt obligations, now worth 15 percent of their face value).
  • There were governmental errors: monetary policy that was too loose; government monitoring agencies that were too lax; and government policies specifically intended to encourage home ownership among African-Americans and Hispanics that had the unintended but quite anticipatable effect of extending mortgages to those who lacked the ability to repay them. There were perverse alignments of market incentives, incentives that put personal interests at odds with corporate interests, and corporate interests at odds with the public interest. There were principal-agent problem within firms, where traders were remunerated with bonuses for selling collateralized debt obligations without regard to the long-run viability of the underlying assets. Rating agencies were corrupted because they were paid by the sellers of the goods they rated, offering unreliable evaluations that redounded against the purchasers of mortgage-backed securities. Large profits were made by companies that packaged and sold mortgages and mortgage-backed securities without needing to be concerned with their ultimate viability.
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The Quiet Coup - The Atlantic (May 2009)

  • Even leaving aside fairness to taxpayers, the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change.
28 Dec 08

Editorial - The Gas Tax - NYTimes.com

  • Who will buy all the fuel-efficient cars that Detroit carmakers are supposed to make?

    The danger is that too few will, especially if gasoline prices remain low. Therefore, it might be time for the president-elect and Congress to think seriously about imposing a gas tax or similar levy to keep gas prices up after the economy recovers from recession.

  • They bought them because they wanted big cars — and because gas was cheap. If gas stays cheap, Americans would be less inclined to squeeze their families into a lithe fuel-efficient alternative.
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27 Dec 08

Downturn Ends Building Boom in New York - NYTimes.com

  • The setbacks for development — perhaps the single greatest economic force in the city over the last two decades — are likely to mean, in the words of one researcher, that the landscape of New York will be virtually unchanged for two years.
25 Oct 08

Volcker: U.S. needs more civil engineers and fewer financial engineers - BloggingStocks

  • "It seems to me what our nation needs is more civil engineers and electrical engineers and fewer financial engineers," Volcker said.
15 Oct 08

Op-Ed Columnist - Amusing, but Not Funny - NYTimes.com

  • Do they want one in which the top 1 percent hauled in more than 21 percent of all personal income in 2005? Do they want a country in which, as my former colleague at The Times, David Cay Johnston, has noted: the tax system “now levies the poor, the middle class and even the upper middle class to subsidize the rich”?
14 Oct 08

What Do I Know?

  • At first glance, January 2009 is starting to look a lot like January 1993. Then, the federal deficit was running at roughly $300 billion a year, or about 5 percent of gross domestic product, way too high for comfort. By contrast, the deficit for the 2009 fiscal year is now projected to be $482 billion, or about 3.3 percent of gross domestic product. That’s not too worrying.
  • The top 1 percent now takes home about 20 percent of total national income. As recently as 1980, it took home 8 percent. Although the economy has grown considerably since 1980 the middle class’s share has shrunk. That’s a problem not just because it strikes so many as being unfair, but also because it’s starting to limit the capacity of most Americans to buy the goods and services the nation produces without going perilously deep into debt. The last time the top 1 percent took home 20 percent of national income, not incidentally, was 1928.
09 Oct 08

Ben Smith - Obama opposed to McCain Mortgage Plan - Politico.com

  • But now that he’s finally released the details of his plan, it turns out it’s even more costly and out-of-touch than we ever imagined. John McCain wants the government to massively overpay for mortgages in a plan that would guarantee taxpayers lose money, and put them at risk of losing even more if home values don’t recover. The biggest beneficiaries of this plan will be the same financial institutions that got us into this mess, some of whom even committed fraud.
01 Oct 08

FRB: Speech, Bernanke--The Financial Accelerator and the Credit Channel--June 15, 2007

  • I have taken you on a whirlwind tour of several decades of research on how variations in the financial condition of borrowers, whether arising from changes in monetary policy or from other forces, can affect short-term economic dynamics.  The critical idea is that the cost of funds to borrowers depends inversely on their creditworthiness, as measured by indicators such as net worth and liquidity
28 Sep 08

Congress aims to finalize rescue bill on Sunday - Sep. 28, 2008

  • An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary.
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