Archive for the ‘Economics’ Category
Friday, October 17th, 2008
The recent massive sell-off in global stock markets, despite an earlier coordinated half-point interest rate reduction in the U.S. and Europe, reflects the continuing failure of policy to come to grips with the scale of the problem. Policy has been consistently marked by “Too little, too late” – and in some instances there have been outright blunders, as in the U.S. Treasury’s decision to let Lehman Brothers fail. (more…)
Posted in Economics | 1 Comment »
Monday, October 6th, 2008
The Federal Reserve and U.S. Treasury continue to fail in their attempts to stabilize the U.S. financial system. That is due to failure to grasp the nature of the problem, which concerns the parallel banking system. Rescue policy remains stuck in the past, focused on the traditional banking system while ignoring the parallel unregulated system that was permitted to develop over the past twenty-five years. (more…)
Posted in Economics, U.S. Policy | 6 Comments »
Thursday, September 25th, 2008
A friend told me the economist Charles Kindelberger had two rules for a credit economy. Rule one was everybody should know that if they get over-extended they will not be bailed-out. Rule two was if everybody gets over-extended they must be bailed out. The U.S. economy has over-extended itself, triggering rule two. But that still leaves open how a bailout should be designed since designs are not all equal. (more…)
Posted in Economics, U.S. Policy | 6 Comments »
Wednesday, September 17th, 2008
The U.S. financial system is caught in a destructive liquidation trap that has falling asset prices cause financial distress, in turn compelling further asset sales and price declines. If unaddressed, it risks sending the economy into deep recession – or even depression. (more…)
Posted in Economics, U.S. Policy | 15 Comments »
Monday, September 8th, 2008
Over the last year, as the U.S. economy has slipped toward (and likely into) recession, there has been much talk of decoupling. According to this idea the global economy has decoupled from the U.S. economy and can continue growing even if the U.S. goes into recession. (more…)
Posted in Economics, Globalization | 3 Comments »
Tuesday, August 26th, 2008
Until a few weeks ago, while oil prices were surging, debate raged about the relative roles of economic fundamentals and speculation in boosting oil prices. Although oil prices have now fallen back from their peak, that debate must not be forgotten, for it has profound policy implications that government officials would be derelict to ignore. (more…)
Posted in Economics, U.S. Policy | No Comments »
Thursday, July 3rd, 2008
Iron ore prices have recently been in the headlines, having jumped eighty-five percent. This news is troubling as such price increases threaten to raise steel prices, which will add to cost inflation and further undermine economic activity. (more…)
Posted in Economics, U.S. Policy | No Comments »
Tuesday, June 24th, 2008
Over the past eighteen months, oil prices have more than doubled, inflicting huge costs on the global economy. Strong global demand, owing to emerging economies like China, has undoubtedly fueled some of the price increase. But the scale of the price spike exceeds normal demand and supply factors, pointing to the role of speculation – and underscoring the need for policy action to clean up the oil market. (more…)
Posted in Economics, U.S. Policy | 10 Comments »
Monday, June 16th, 2008
The Federal Reserve has recently received much criticism from economic conservatives who claim it has ignored inflation, thereby risking a rerun of the 1970’s inflation show. In response, renowned Princeton economist Paul Krugman has come to the Fed’s defense arguing today’s inflation is fundamentally different from that of the 1970s. (more…)
Posted in Economics, Political Economy, U.S. Policy | 7 Comments »