Graph of the day: US national debt
Via Brad DeLong.
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In mathematics you don't understand things. You just get used to them.
—John von Neumann
Economics
Dean Baker: the stock market is not the economy
Economics Lesson for Reporters: Other Things Equal, a High Stock Market is a Transfer of Wealth from People Who Don’t Own Stock to People Who Do
Reporters on economics and business should know that, but from the reporting on the bailout, it is clear that very few do. There seems to be a view that stock [...]
Tally of Federal Rescues
Barry Ritholtz points us to this nifty graphic, courtesy of the NY Times (click image for bigger version).
(Via The Big Picture)
Dean Baker: Pets.com is not coming back
Seems I’m not doing anything but quoting Dean Baker. So be it.
Pets.Com Is Not Coming Back and House Prices Will NOT Recover!
There are numerous accounts of the bailout that discuss the possibility that taxpayers will make money on the deal when the housing market stabilizes (e.g. the print version of the Post article). This is [...]
Dean Baker: Why Bail?
Let’s just quote Dean Baker, shall we? (If the apparent date of the post is correct, this went up early Monday morning, before the House voted the bailout bill down.
Why Bail? The Banks Have a Gun Pointed at Their Head and Are Threatening to Pull the Trigger
If you have a real story, you don’t have [...]
Elizabeth Warren: Is the Crisis Real?
Is the Crisis Real?
At a Harvard panel discussion [video] yesterday, economics professor Ken Rogoff made an interesting point: The liquidity crisis isn’t real. Or, to restate it: Any liquidity crisis is caused by the promise of a government bailout. Ken said that his many friends in investment banking said that there is plenty of money [...]
What subprimes look like
Last week the SF Chronicle published a story describing two subprime mortgages written in San Francisco by Lehman Brothers subsidiary BNC Mortgage.
One homeowner, Johnny Pitts, was a Muni bus driver who had bought an Oakland home for $429,950 in 2005. His mortgage payment, which had started at $2,880, was about to reset to $3,730 a [...]
A really large number
Now this is reassuring.
Bad News For The Bailout — Forbes.com
In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.
“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”
Credit default swaps
The New York Times printed this piece on credit default swaps, which have been in the news quite a bit recently. The basic idea is fairly simple, but the ramifications give me a headache. You can have one too.
Arcane Market Is Next to Face Big Credit Test
Credit default swaps form a large but obscure market [...]
Existing home sales 2005-present
This chart is not seasonally adjusted, so it’s hard (impossible) to see month-to-month trends. But the annual trend is certainly dramatic. The crash starts in April 2006 and never looks back.
Calculated Risk via Barry Ritholtz
Update: here’s a companion graph (on a much longer time scale) of real housing prices from Matthew Yglesias. Not surprisingly, the [...]
Kick top management in the teeth
Thus Dean Baker.
Leonhardt is Wrong, Limiting CEO Pay is Not a Sideshow to This Bailout
In his weekly NYT column, David Leonhardt argues that limits on executive compensation are a sideshow to the bank bailout. Actually, they are an essential part of the story.
A key issue in the bailout is addressing moral hazard. The [...]
Barry Ritholtz: We’re all (Groucho) Marxists now
The “New” New Deal
I am having a hard time keeping up with all of the bailouts and special facilities created for dealing with this crisis. Am I missing any?
Bear Stearns
Economic Stimulus progam
Housing Bailout Program
Fannie & Freddie
AIG
No Short selling rules
Fed liquidity programs (Term Lending facility, Term Auction facility)
Money Market fund insurance program
New RTC type [...]
John Cole is pissed off
You Have To Be Shitting Me:
This is unbelievable:
The federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues.
At the center of the potential [...]
Saving the People’s Bank of China
Daniel Gross:
The bailout of Fannie Mae and Freddie Mac will be sold and marketed as an effort to shore up the U.S. housing market. Maybe so. But it is mostly meant to shore up our damaged international financial standing, preserving leadership and making sure the U.S. Treasury Secretary doesn’t get tarred and feathered at the [...]
Freddie/Fannie: too little too late?
In the wake of the Freddie Mac/Fannie Mae bailout, Paul Krugman is pessimistic.
The current U.S. financial crisis bears a strong resemblance to the crisis that hit Japan at the end of the 1980s, and led to a decade-long slump that worried many American economists, including both Mr. Bernanke and yours truly. We wondered whether the [...]
The myth of double taxation
As a rule I’m content to trust that my small band of readers will follow the excellent Dean Baker on their own (he’s the Beat the Press link on my Links list). But from time to time, I can’t resist reposting. This post recapitulates one of Baker’s themes, that the notion that corporate dividends are [...]
Arithmetic, Not Ideology
Dean Baker on one of his favorite subjects, the attribution of ideological motivations to political actors, quoted here mainly for its fine last line.
Frank-Dodd Bailouts: Arithmetic, Not Ideology
It is remarkable how often reporters/columnists feel the need to assert that political disputes are about ideological issues. Why do they feel the need to make assertions for [...]
Econbrowser: What if we’d been on the gold standard?
James Hamilton speculates on the consequences of a US move to a gold standard in 2006.
What if we’d been on the gold standard?:
If the U.S. had decided to go back on the gold standard in 2006, where would we be today? That’s a question my friend Randy Parker recently asked me. Here’s how we both [...]
Kenneth Arrow on cutting emissions
I’m a month late posting this, but here we are. Kenneth Arrow (yes, that Kenneth Arrow) weighs in on the economics of mitigating climate change sooner rather than later. It’s particularly relevant as climate-change deniers shift from “it’s not happening” to “it’s too late (or too expensive) to do anything about it.”
The case for [...]
Income distribution
Spencer at Angry Bear posts a couple of graphs, based on new CBO data:
There’s polling data out that suggests that many (most) respondents think we’re already in a recession. I suppose it depends on who you ask.
(Via Angry Bear)