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Bloomberg: Don’t Blame Banks for Mortgage Crisis

housing-prices

Did Congress cause the mortgage crisis by mandating loans to poor people? No.

What Lessons Has The Economy Learned From 2008? Apparently None.

money-bankruptcy

The systemic risks of financial institutions haven’t changed much since 2008.

The Cause of the Financial Crisis

movie-popcorn-filmstrip

Want to know who’s responsible for the subprime lending crisis that is feeding the bad economy today? The answer is obvious.

Europe: Reason for Optimism?

euros

While I’ve been skeptical for awhile about whether the Euro can — or should — survive the present crisis, key governments are now starting to address their own budget crises, finally giving some reason for optimism. My New Atlanticist piece, “Euro Crisis:  Light at the End of the Tunnel?” details the reasons for skepticism, including […]

Euro Trillion Dollar Bailout: Is Too Much Enough?

Euro Bailout

After months of dithering on a Greek bailout that no one thinks will work, European leaders — seemingly out of nowhere — agreed to a €750 billion reserve fund to bolster the Euro. In my New Atlanticist piece, “Trillion Dollar Bet on the Euro,” I round up the expert commentary and wonder whether this stunning […]

Goldman Sachs Fraud Case

goldmansachs

As readers are likely aware by now, Goldman Sachs was yesterday charged with fraud by the Securities and Exchange Commission.  I’ve resisted comment thus far, as I’ve been tied up with a minor crisis at work and don’t have any especial expertise in the vagaries of securities law, anyway.   But here’s what we know thus […]

Euro Fate Rests in German Hands

Angela Merkel Greek Rescue Summit

The unfolding Euro crisis has raised a new variant on the old German Question.  For much of its history as a state, Germany has been the pivotal state in Europe.  After the Cold War and the reunification of East and West, the fate of “Europe” as a unified political and economic space depended entirely on […]

Aughts Better Than We Thought?

naughts

George Mason economist Tyler Cowen argues that, “It may not feel that way right now, but the last 10 years may go down in world history as a big success.” That idea may be hard to accept in the United States. After all, it was the decade of 9/11, the wars in Iraq and Afghanistan, […]

Did Organized Crime Save The Banking System?

law-scales-justice-flag

The head of the United Nations Office on Drugs and Crime has made the claim that organized crime took advantage of the financial crisis last year to effectively launder their money–thereby preventing banks from collapsing. Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds […]

Krugman: Jobs Program Needed

WPA Work Promotes Confidence Poster

Paul Krugman argues that “the recession is probably over in a technical sense” the government must nonetheless treat the 10.2 unemployment rate as a crisis because there are “six times as many Americans seeking work as there are job openings, and the average duration of unemployment — the time the average job-seeker has spent looking […]

National Debt Hits $12 Trillion, Will Double By 2019

obama-debt

Barack Obama has been president for just under 10 months but he’s added two trillion to the national debt and will double it by the end of the decade.  CBS’ Mark Knoller: This latest milestone in the ever-rising journey of the National Debt comes less than eight months after it hit $11 trillion for the […]

Bear Stearns Jurors: I’d Invest With Them

bear-stearns

Not only did the government lose its case against two top Bear Stearns managers but at least one juror came away wanting to invest with them. Prosecutors missed the mark so widely in the fraud trial of Bear Stearns Cos. hedge fund managers Ralph Cioffi and Matthew Tannin that a juror said after their acquittal […]

Obama Pay Czar Slashes Compensation for Bailed Out Firms

pay-restrictions-poll

The top earners at the top firms bailed out by the U.S. government during the financial crisis will have their pay and bonuses drastically cut. Deborah Soloman and Dan Fitzpatrick for WSJ: The U.S. pay czar will cut in half the average compensation for 175 employees at firms receiving large sums of government aid, with […]

Professional Failure

money-investing

Or this post could be titled how doctors routinely fail to predict illnesses, diseases and injuries. It strikes me that this is one of the main problems with health care in this country. If only doctors could get better at practicing their art then we might not have such a problem with run away health […]

The Perverse Incentive to Foreclose

money-investing

Doug Rushkoff points out that mortgage servicers have very little incentive to help out borrowers who could afford their mortgages by refinancing. What it means is that mortgage companies can often make more money when the homeowner goes into foreclosure than if the homeowner pays his bills. The longer a homeowner is delinquent, the more […]

Divorces Drop Along with Housing Prices

divorce-finger-ring

The financial crisis has had one silver lining: fewer divorces.  Josie Cox for Reuters: Fewer British couples are filing for divorce as the sharp drop in property prices makes it hard for couples to sell a joint home and the credit crunch dampens a desire to fund two separate households, according to a study on […]

A New Financial System

20dollarbill

Laurence J. Kotlikoff and Edward Leamer put forward how the financial sector should be redesigned. The system was supposed to channel our hard-earned savings into the best real investments: new homes, offices, factories, equipment and research. And it was supposed to correctly price our assets. It did neither. Instead, Wall Street morphed into a vast […]

Freddie Mac CFO Commits Suicide

kellerman

Freddie Mac CFO David Kellerman has killed himself, DC’s WUSA9 reports. David Kellermann, Acting Chief Financial Officer and Senior Vice President of Freddie Mac, was found dead this morning. Fairfax County Police officials tell 9NEWS NOW they responded to his home around 5 a.m. after his wife alerted them to his suicide. Kellermann was 41 […]

DoD Cutting Major Programs in Restructuring

casey-army-fcs

The Defense Department is finally getting somewhat serious about COIN and other forms of nontraditional warfare, signaling major priority shifts with its new budget proposal. Gates’s aides say his plan would boost spending for some programs and take large whacks at others, including some with powerful constituencies on Capitol Hill and among influential contractors, making […]

Concentration of Power

pinky_brain

Via Glenn Reynolds, I see that Arnold Kling has managed to come away from an anti-capitalism screed in Rolling Stone by Matt Taibbi with this conclusion: For quite a while, but especially over the last nine months, the best way to predict developments in politics and finance has been to ask: what will do the […]

Quote of the Day – Auto Edition

money-investing

“Henry Blodget (along with others at Clusterstock) wonders why bankers, notably BoA’s Ken Lewis, are getting such kid glove treatement while GM’s Rick Wagoner gets the axe. I think I can explain that. The White House’s pool of economic advisers isn’t filled to the brim with auto execs.” – Dave Schuler Indeed.   Timothy Geithner and […]

Economist to Obama: ‘Lead, Dammit’

obama-thinking-2

The editorial board at The Economist (which apparently considers itself a “newspaper” despite coming out weekly in magazine format) praises President Obama for having “already done some commendable things” in the foreign policy arena but charges that, domestically, “His performance has been weaker than those who endorsed his candidacy, including this newspaper, had hoped.”  They […]

Republican ‘Budget’ Embarrassing

road-to-recovery

Steven Taylor, a lifelong Republican, calls “The Republican Road to Recovery,” the GOP’s budget-without-numbers, “an “embarrassing budget proposal.” Here’s the deal: if one is going to engage in a serious1 policy debate about very serious fiscal and monetary matters in a time of a very deep financial crisis, one has to come prepared and be […]

More AIG Employees Quit

money-investing

More employees are leaving AIG, and the financial products unit, which is the division that has brought the company to its current state. I suppose one could say, “Good riddance to bad rubbish,” but a word of caution: you now own this company. The taxpayers are on the hook for this one. To date, AIG […]

AIG Executive Quits in Style

aig-building

Jake DeSantis, an executive in AIG’s much-derided financial products unit, has resigned in protest of what he believes shoddy and dishonorable treatment by his firm and his country’s political leadership.  NYT has published an open letter to CEO Edward Liddy. I take this action after 11 years of dedicated, honorable service to A.I.G. I can […]

China: Replace Dollar as World Currency

world-currency

Zhou Xiochuan, head of China’s central bank, published a paper yesterday urging the creation of an international reserve currency independent of the dollar and under the control of the International Monetary Fund.  He noted that there is an inherent conflict between domestic political needs and the interest of the entire financial system and implied that […]

Why Small Things Get Big Attention

no-hog-factories

Steven Taylor makes a point I made on Wednesday’s edition of OTB Radio (“AIG Bonus Brouhaha“) about why seemingly minor matters resonate with the public while major issues often don’t. [W]hile broad and complicated policy may not fully register in the minds of the public, a smaller, specific and easier to understand action can capture […]

James Hamilton on the AIG Bonuses

money-investing

Prof. James Hamilton offers his take on the AIG bonuses. One part certainly scores a good point, IMO, One of the reasons this is so outrageous is that the promise of such bonuses was in fact one of the very factors that caused our current problems, creating incentives for managers of AIG to get out […]

Don’t Pay Your Mortgage

money-investing

It’s a sucker’s game if you can get the President to think of it as an outrage that requires the government to tear up contracts after the fact. Of course, a significant part of the problem here is that the government didn’t do its job. They didn’t check to make sure this wouldn’t happen. Guess […]

OTB Radio – Tonight at 7 Eastern

The next episode of OTB Radio, our BlogTalkRadio program, will record and air live tonight from 7-8 Eastern. Dave Schuler will join me to talk about the AIG bonus brouhaha, the ongoing financial mess, the meaning of words, and various other issues. Please join us. We’ll also be taking your calls at (646) 716-7030. You […]

G20 Happy Talk Doesn’t Hide Tears

G20/

The G20 ministers ended their meetings yesterday proclaiming consensus and pledging to cooperate in solving the financial crisis.  This, despite their being very little consensus among the G20 leaders on what policies to take and no agreement being reached that will have meaningful policy impact. As I note in my New Atlanticist roundup essay “G20 […]

The Consensus Fallacy

friedman-thinking-hard

Thomas Friedman suggests that  what we need to get out of this financial mess is a little more BOGSATT: Which is why I wake up every morning hoping to read this story: “President Obama announced today that he had invited the country’s 20 leading bankers, 20 leading industrialists, 20 top market economists and the Democratic […]

Summers: ‘Excess of Fear’ Must be Broken

summers-brookings

Now they tell us: President Barack Obama‘s top economic adviser said Friday the nation’s economic crisis has led to an “excess of fear” among Americans that must be broken to reverse the downturn.  National Economic Council Director Lawrence Summers said consumer spending seems to have stabilized in an encouraging sign, but he also suggested it […]

Thanks, But Here’s Your Money Back

money-investing

Banks that took bailout money are now finding out that the money came with strings attached. Color me shocked. The list of demands keeps getting longer. Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay […]

It’s the Incentives, Stupid

money-investing

In reading this article, thanks to Dave Schuler for the pointer (you can read Dave’s take on the article here), there is this interesting paragraph, On Tuesday morning in Washington, Ben Bernanke, the Federal Reserve chairman, gave a speech that read like a sad coda to the “Looting” paper. Because the government is unwilling to […]

Quote of the Day – Bernanke Edition

ben-bernanke-photo

“Y’know, you can’t wish these things into being.” – Dan Drezner, commenting on Fed chairman Ben Bernanke’s “eliding of the international dimension of policymaking.” Much of the commentary I’m seeing on responding to major crises — whether we’re talking about the global financial crisis, energy, climate change, or Middle East peace — these days ignores […]

Academic Hiring: Year of No Jobs

phd-graduates

For years, there’s been talk of a wave of Baby Boomer faculty retirements that would finally break the logjam that has made it difficult for newly minted PhDs to find jobs. The waiting continues: Fulltime faculty jobs have not been easy to come by in recent decades, but this year the new crop of Ph.D. […]

Blue Chip Penny Stocks

penny1

Barry Ritholz has a depressing list of companies the were going gangbusters quite recently and are now damned near worthless.  A partial list: AIG (39 cents) Citigroup (98 cents) E*Trade (66 cents) Unisys (37 cents) Ford ($1.83) GM ($1.83) For those of us who don’t buy individual stocks, here’s some perspective: The bankrupt New York […]

OTB Radio – Tonight at 7 Eastern

The next episode of OTB Radio, our BlogTalkRadio program, will record and air live tonight from 7-8 Eastern. Dave Schuler will join me to talk about the revolt of the Obamacons, the drop in the Dow, and the fact that the global financial crisis is, well, global. Please join us. We’ll also be taking your […]

Manufacturing: Good Riddance!

assembly-line

Two recent posts at The League of Ordinary Gentlemen have me intrigued. Yesterday, Freddy, closed a piece arguing for stronger labor unions and better enforcement of (along with reform of) our immigration laws thusly: This won’t come without cost. Goods and services, if produced here and for living wages, will certainly be more expensive. It […]

Dow at Lowest Level Since Clinton Administration

USA/

The economy hasn’t been this bad since the last time we had a Democrat in the White House. Stocks are down sharply today and the Dow Jones industrial average fell below 7,000 for the first time since 1997 on signs of further turmoil among financial firms and a downbeat report from investment guru Warren Buffett. […]

New Iron Curtain?

EU-HUNGARY/

The political financial crisis came to a head yesterday in Europe, with Hungary begging for help from its fellow EU members under the peril of a new “iron curtain” dividing the Continent and getting matter-of-factly rejected.  My New Atlanticist piece on the controversy, “Economic ‘Iron Curtain’ Dividing Europe?” concludes: The present crisis has had the […]

Exchange Rates Fluctuate!

currency

In my New Atlanticist piece “Euro Drops Ever So Slightly After Bailout Rejection,” I give a YahooNews headline writer a hard time for turning an insignificant change in the dollar-euro exchange rate into a commentary on Europe’s response to the financial crisis. Hilarity (or, at least, some historical perspective) ensues. Photo by Flickr user Alex […]

US-Europe Relations Still Need Work

Obama Elected European Papers

A series of discordant columns over the weekend makes it clear that a new American president has not been a magic fix for the transatlantic relationship. Indeed, the global financial crisis has exacerbated differences, not just between America and Europe but within Europe as well. I round up and synthesize these columns in my New […]

Fixing Banks Ain’t Easy

uncle-sam-banks

In a NYT column, Tyler Cowen argues persuasively that none of the “simple” solutions floating around, ranging from nationalization to bankruptcy to the Swedish Plan are likely to work in fixing America’s “bank holding companies.”  But, while I’m as capitalistic as the next guy (if, say, I’m sitting between Dan Drezner and Megan McArdle) I […]

OTB Radio – Tonight at 7 Eastern

The next episode of OTB Radio, our BlogTalkRadio program, will record and air live tonight from 7-8 Eastern. Dave Schuler will co-host and we’ll be joined by our special guest Tufts University political scientist and ForeignPolicy.com blogger Dan Drezner to talk about the financial crisis, the stimulus, and related issues. Please join us. We’ll also […]

Taxpayer Risk: $9.7 Trillion

money-investing

When all of the various programs to address the financial crisis are added up the total that taxpayers on the hook for could approach $9.7 trillion. “We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on […]

Reinhart and Rogoff on the Financial Crisis

money-investing

Carmen Reinhard and Kenneth Rogoff on the financial crisis. Let’s start with the good news. Financial crises, even very deep ones, do not last forever. Really. In fact, negative growth episodes typically subside in just under two years. If one accepts the NBER’s judgment that the recession began in December 2007, then the U.S. economy […]

Uncertainty and Confidence

money-investing

What role does uncertainty and lack of confidence play in the current economic situation? I was listening to Russell Robert’s podcast with John Cochrane of the University of Chicago on financial crisis and one point he raised is that people are lacking confidence and are uncertain about what taxes will look like in the future. […]

Iceland’s Openly Gay Prime Minister

Johanna Sigurdardottir Lesbian PM Photo

While the global financial crisis has spawned many predictions of political change, here’s one I’m betting no one saw coming: The World’s First Openly Gay Prime Minister. Not, I hasten to add, that there’s anything wrong with that.

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