Joseph Stiglitz, in a comment in the Guardian (hat tip Mark Thoma), tells us he would rather have been wrong about the housing bubble. And he anticipates that, since direct and indirect spending related to housing accounted for two-thirds to three-quarters of US economic expansion since the end of the tech boom, the unwinding of […]
Read more...Ah, the thankless task of endeavoring to uphold sensible principles when events conspire against you. Mervyn King, the governor of the Bank of England, had to eat quite of a bit of crow in the Northern Rock bailout, when a mere two days after a submission to Parliament in which he criticized other central bankers […]
Read more...The proponents of a “living wage” in the US have argued that setting minimum wages at a level that leaves full time workers at below subsistence level is bad policy, both economically and socially. While opponents argue that increasing pay for the lowest earners will reduce the number of jobs, elasticity of demand isn’t all […]
Read more...The Journal is breathtaking in its propensity to sell stories past their sell-by date as news. The latest example is an article, “Pricing Tactics of Hedge Funds Under Spotlight,” that will appear in the Tuesday “Heard on the Street.” Here’s the opening paragraph: New academic research suggests that some hedge-fund managers may cherry-pick flattering prices […]
Read more...The Financial Times reports today that institutional investors and the SEC are taking interest in the difficult-to-justify pay disparities between the CEO and his immediate subordinates at some public companies. And isolated data points, like Sallie Mae, suggest that the ones with the biggest gulf (in its case, ten times) aren’t delivering commensurate performance. A […]
Read more...In an interview published in today’s Financial Times, soon-to-retire IMF managing director Rodrigo Rato declares the dollar to be undervalued. Now we have noted that some technically minded traders see the dollar as oversold at current levels. But “oversold” is not the same thing as “undervalued.” Oversold suggests that there will be a near-term rebound, […]
Read more...It’s revealing that Robert Kuttner’s hard hitting, cogent testimony before the House Committee on Financial Services (hat tip Culture of Life News) has gotten very little attention in the media and the blogsphere. Perhaps it’s because Kuttner, an economist and former investigator for the Senate Banking Committee, argues persuasively that the strong ideological bias against […]
Read more...I am kicking myself that I didn’t come up with the proposal made by Brandeis professor Stephen Cecchetti in today’s Financial Times. His opinion piece, “A better way to organise securities markets,” is the single best idea for securities reform I have seen in a very long time. It is simple, elegant, and addresses many […]
Read more...By way of background, an Extreme Measure is a recommendation to take a radical and, upon examination, unworkable approach to a pressing problem. We’ve only been on this beat recently, but so far, the Extreme Measures we’ve seen have had to do with the US housing crisis or the credit contraction. The first was from […]
Read more...The Financial Times notes in a story today,”Credit squeeze pushes ECB to peg rates,” that the European Central Bank refrained from its inclination to increase rates to combat increasing inflation. One has to wonder whether the failure to increase rates is out of the recognition that a hike would put more downward pressure on the […]
Read more...Despite the evidence of some recovery in the credit markets, such as the sale of some formerly-hung LBO debt (at admittedly lower prices) and the return of buyers to the structured credit market, the patient is far from healthy. An article “Is the storm over? Credit market conditions look changeable,” by Gillian Tett in the […]
Read more...From time to time, we’ve written that the hope of many policymakers, that struggling subprime borrowers would be salvaged by loan modifications, aka “mods”, would likely be disappointed. A Financial Times story, “Mortgage lenders in subprime ‘traffic jam’,” bears this thesis out. Let’s back up and note that loan modifications are often the best course […]
Read more...Martin Wolf, the Financial Times’ economics editor, may have called the demise of securitization prematurely in his article, “Securitisation: life after death.” This is an odd piece for the normally thoughtful and pragmatic Wolf. On the one hand, he gives a succinct and colorful of assessment of the credit crisis, depicting it as yet another […]
Read more...Ah, time for a reality check on the Wall Street Journal/Administration party line. Here we’ve been told how horrible Sarbanes-Oxley is, and how those tough corporate governance measures are bad for the competitiveness of US markets. Like many of the things the officialdom in Washington has been telling the public, this line of reasoning doesn’t […]
Read more...Credit Slips tells us that bankruptcy filings are increasing, but the new bankruptcy law has succeeded in keeping them below the 2005 level (the law became effective late October 2005). They dispute the idea that this represents progress. From Credit Slips: According to the folks at Automated Access to Court Electronic Records (AACER), preliminary figures […]
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