It’s always dangerous for mere mortals to take issue with Serious Economists, but let’s start with Brad DeLong’s thesis (hat tip Mark Thoma): The fact that there is even a small liquidity crunch for banks implies larger liquidity crunches for less intensively regulated financial institutions, and even greater liquidity crunches for manufacturing and real-estate companies. […]
Read more...Bloomberg tells us that the Fed and the Treasury made a joint statement today asking mortgage servicers to take a more proactive stance, identify borrowers in danger of gong into default, and offer loan modification. Tanta at Calculated Risk provided a link to the “ Interagency Statement on Loss Mitigation Strategies for Servicers of Residential […]
Read more...Jim Hamilton should get an award for his remarks today at the Federal Reserve’s conference at Jackson Hole. His talk sought to step away from the issue du jour, namely what if anything, to do about housing, and look at larger structural and regulatory concerns. He brought up uncomfortable issues, in particular, the rising level […]
Read more...Bloomberg and the BBC report that Barclays, the third largest bank in the UK, borrowed “as much as ” 1.6 billion pounds ($3.2 billion) from the Bank of England. The bank claimed it fell short of caah due to an error in its trade processing system, and it discovered the need for funding too late […]
Read more...I hope you don’t think this blog is in danger of becoming the “all Fed, all the time” channel, but this is an otherwise slow news period and central bankers are very much in the spotlight. Willem Buiter has a long post on his blog which discusses the Fed’s limited independence compared to other central […]
Read more...Lucy Kellaway, a Financial Times columnist who writes about corporate fads, once said no new business technique is too ridiculous to be put into practice. The Springwise newsletter (“New business ideas for entrepreneurial minds”), demonstrates that the same can be said of new business concepts. This week’s edition breathlessly describes what can only be depicted […]
Read more...Some reformers have argued that we are at the end of a regulatory paradigm and need to consider fundamental change in securities laws. A major obstacle, given that capital markets are now global, is the need for greater international cooperation and possibly even a new international body. It turns out some foreign regulators are already […]
Read more...Has Roubini gone to the Dark Side? Nouriel Roubini, normally the voice of prudence, makes a marked shift in his latest post, “Fiscal versus Monetary Solutions to the Subprime Crisis. ” He sympathizes with those like Bill Gross of Pimco who call on the federal government to rescue mortgage borrowers at risk of losing their […]
Read more...Today, in a comment at the Financial Times, “This is where Freddie and Fannie step in” (subscription required), Harvard’s Larry Summers argued that the subprime crisis highlights three questions. Most commentators focused on the one question he not only posed but answered, namely, what role government should play in aiding the flow of credit to […]
Read more...Bloomberg tells us a judge is questioning the legal domicile of the failed Bear funds for bankruptcy purposes: A federal judge refused to grant permanent protection from U.S. lawsuits for Bear Stearns Cos.’ two bankrupt hedge funds, questioning whether the Cayman Islands should be the principal site of their liquidation. U.S. Bankruptcy Judge Burton Lifland […]
Read more...Recently, we’ve noticed a new theme among economics writers: Extreme Measures. Commentators have looked toward the end of the road we are on and fear it leads to a precipice. Hence the calls for radical course correction. Paul Krugman and Bill Gross of Pimco, each of whom proposed large scale rescues of homeowners at risk […]
Read more...A reader pointed me to Willem Buiter’s blog, and it is a real find. For those who haven’t heard about him, he (along with Anne Siber) has proposed a rethinking of central bankers’ roles in times of crisis, arguing that they should serve as market makers of the last resort. One reason to read Buiter, […]
Read more...Jim Grant, a Wall Street fixture via his “Grant’s Interest Rate Observer,” a newsletter that provides probing, skeptical, and literate commentary on the credit markets, has a very good op-ed piece in today’s New York Times. Grant takes a big swipe at the US regulatory policy, depicting it as privatizing the profits of banking and […]
Read more...We’ve noticed a new theme among economics writers: Extreme Measures. Commentators have suddenly looked into the abyss, either of the depth of the US subprime/housing problem or the progressing credit crunch that has already caused a seize up in the money markets, and are proposing radical courses of action. Our first sighting was Paul Krugman, […]
Read more...Earlier this week, I sought to frame the prevailing views of what the supervising adults, namely central bankers, should do about the turmoil in the financial markets. They break down into four groups (names of representative spokesmen included): The keep the party going types (Jim Cramer and his less histrionic brethren) who argue that markets […]
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