Online Journal of Politics and Foreign Affairs
In recent days, we’ve seen rioting and unrest in Latvia, Lithuania, Bulgaria, the Czech Republic and Hungary and the collapse of the government in Iceland — all directly related to the global financial crisis. In a New Atlanticist piece, “Security Implications of the Financial Crisis,” I wonder what it all means, including my colleague Jim [...]
In a New Atlanticist piece, “Euro’s Soft Underbelly Exposed by Financial Crisis,” I discuss the down side of a unified European currency — especially one that comes with outsized expectations in undersized economies.
V. V. Chari, Patrick Kehoe, and with Lawrence Christiano1 have a working paper arguing that three popular statements regarding the financial crisis are largely a myth. Bank lending to nonfinancial corporations and individuals has declined sharply. Interbank lending is essentially nonexistent. Commerical paper issuances by nonfinancial corporations has declined sharply, and rates have risen to [...]
I missed President Bush’s farewell address last evening, as I was otherwise detained at the British ambassador’s residence listening to Dr. Henry Kissinger deliver the Atlantic Council’s annual Makins lecture. It was, I suspect, a good trade. I’ve been blogging up a storm about the speech this morning at New Atlanticist. In “Kissinger: Iran Diplomacy [...]
We’ve spent $350 billion to stimulate the financial system, thus far with no obvious effect. Naturally, this calls for dumping in that much again — and perhaps again after that. I discuss this odd situation over at New Atlanticist in a piece called, “Stimulus Has its Limits (But We Don’t Know What They Are).” My [...]
The Muslims are quietly taking over our banks and imposing Sharia law on our financial system. Would you believe that this is a good thing? Read my New Atlanticist piece, “Islamic Banks Surge, Thanks to Financial Crisis” to see why.
Buried in the article that James linked in his earlier post about the loophole that essentially eliminates the executive pay limitations of the TARP program is this fun little tidbit: Lawmakers agreed to the Treasury’s request that the measure apply only to executives at companies whose assets were bought by the government through auctions. In [...]
The folks in charge of determining whether we’re in recession or not have now declared that we’ve been in one for a whole year, despite not meeting the technical definition. The US economy has been in recession since December 2007, a panel of economists charged with the official designation of business cycles said Monday. The [...]
Daniel Gross makes the case that I’ve been making for weeks, supplying hard numbers where I’ve relied on common sense, that the current mess isn’t comparable to the Great Depression: Both got going when financial crisis led to a reduction in consumer demand. But the two phenomena differ substantially. Instead of workers with 5 o’clock [...]
The following headline appeared in Berliner Zeitung a while back and was captured by Idle: Megan McArdle and Alex Massie both found it slightly more amusing that I do but I thought it worth sharing, if a bit too risky for New Atlanticist.
Grover Norquist has applied for a $700 billion subsidy from the Treasury. His appeal reads, in part: I have a plan for this $700 billion which should be just what’s needed to get the American economy going. Since the money came from the taxpayers in the first place, I propose giving it back to them. [...]
have been greatly exaggerated. Representatives from the countries with the twenty largest economies in the world met yesterday and, to what should be a surprise to no one, accomplished very little other than to agree that something should be done…maybe in the spring. Expectations for the weekend summit of global leaders from the Group of [...]
P.J. O’Rourke lets his fellow conservatives have it with both barrels in a long essay worth reading in full. Some excerpts: Let us bend over and kiss our ass goodbye. Our 28-year conservative opportunity to fix the moral and practical boundaries of government is gone–gone with the bear market and the Bear Stearns and the [...]
After nearly four years of watching this campaign unfold, it’s about to wrap up. There are another thirty-six hours of so of campaigning left and probably no more significant polls to be released. So, it’s time to go on the record and predict the outcome. Others’ Projections: An Obama Rout RealClearPolitics: Obama 353, McCain 185 [...]
Given that Thomas Barnett is an avid internationalist who abhors the National Greatness strain of foreign policy that McCain champions, I was not at all shocked to see via the Security folder in my RSS reader that he has endorsed Barack Obama. Obama’s task is the great unwinding of the Bush debacle, which Bush himself [...]
Martin Wolf, the chief economics commentator at the Financial Times, told an Atlantic Council audience earlier today that the global financial crisis has “re-emphasized the centrality of U.S. dollar as a currency” and demonstrated once again that “when things go really badly lots of people want go to the U.S. even if U.S. is why, [...]
Bill McInturff, John McCain’s chief pollster, released a memo last night saying the campaign has made “significant progress” in the last week and that “All signs say we are headed to an election that may easily be too close to call by next Tuesday.” Disclaimer up front: As I’ve noted numerous times before, my wife [...]
The photo and headline at right are currently atop YahooNews. The pic didn’t seem to go with any of the other stories and, sure enough, clicking it sent me to “White House tells banks to stop hoarding money.” It’s not clear whether this was some sort of goof or whether this is YahooNews’ editorial commentary [...]
I’ve been waiting to draw this analogy and Alex’s post on the financial crisis has provided me the opportunity. It touches back on some points on the role of computers in the financial crisis that I’ve been making for some time. I can’t help but wonder if some of what we’re seeing in the problems [...]
Via Kevin Drum, here’s an IM conversation between Rahul Dilip Shah and Shannon Mooney, who are (were?) analysts at Standard & Poor’s. They were discussing the structure of some mortgage-backed securities S&P had been asked to rate. RDS: btw: that deal is ridiculous SM: I know right … model def does not capture half of [...]
The Washington Post, after months of agonizing, has decided to endorse Barack Obama for president. No, I’m not surprised, either. While their editorial tone is relatively centrist — they even supported the Iraq War before they turned against it — they have long had sympathies with the Democratic Party. I am, however, somewhat bemused by [...]
In Reports of America’s Decline Greatly Exaggerated, a piece for New Atlanticist, I argue that the revived talk of American decline — this time, blamed on the financial crisis — is without much foundation. If the Eurozone were to emerge as a united economic system, the United States would quickly move into second place, overwhelmed [...]
Tonight’s third and final debate between John McCain and Barack Obama is the last scheduled opportunity for the candidates to make an impression on the voters. Election Day is less than three weeks away and, by the looks of things, McCain needs a miracle. According to the poll averages at RealClearPolitics, McCain is getting crushed. [...]
Headline skimmers would get a very different picture of what happened yesterday depending on what paper they happen to pick up: U.S. Investing $250 Billion in Banks – NYT U.S. Forces Nine Major Banks To Accept Partial Nationalization – WaPo Bush: Treasury will take $250 billion stake in banks – USA Today U.S. to pump [...]
The stock market has set records today. Good ones, for a change. Wall Street stormed back from last week’s devastating losses Monday, sending the Dow Jones industrials soaring a nearly inconceivable 936 points after major governments’ plans to support the global banking system reassured distraught investors. All the major indexes rose more than 11 percent. [...]
I heard on the radio this morning that the Treasurey Department is thinking of adopting the British rescue plan of recapitalizing banks by purchasing a majority of the shares in banks that opt into the rescue plan. Now keep in mind this is completely unconfirmed because at this point I can’t find any articles anywhere [...]
The world is waiting on tenterhooks as the representatives and ministers from the G7, the G20, and the IMF try to figure out what in the dickens to do about the worldwide financial crisis: WASHINGTON (AFP) – Key nations threw their support behind efforts to tackle the financial turmoil and amid grim warnings of a [...]
In an op-ed in the New York Times this morning, Richard Dooling discusses the role of computer models in the ongoing financial crisis: The Wall Street geeks, the quantitative analysts (“quants”) and masters of “algo trading” probably felt the same irresistible lure of “illimitable power” when they discovered “evolutionary algorithms” that allowed them to create [...]
I got a CNN breaking news alert a few minutes ago informing me that the Dow had dropped more than 500 points in the opening minutes of trading. It has already recovered: Stocks staged a huge turnaround Friday morning, with the Dow erasing most of a 700-point slide as fears of a global recession were [...]
The next episode of OTB Radio, our BlogTalkRadio program, will record and air live tonight from 7-8 Eastern. Dave Schuler and Alex Knapp will join me tonight to talk about the debates, the campaign in general, the continuing fallout in the financial sector, and related matters. Please join us. We’ll also be taking your calls [...]
The Federal Reserve and European central banks have orchestrated a coordinated reduction in interest rates: Central banks around the world cut short-term interest rates by up to half a percent on Wednesday after investors across Asia and Europe unleashed waves of sell orders onto already depressed stock exchanges. The Federal Reserve, the European Central Bank [...]
Over at New Atlanticist, I have a new post up entitled, “America’s Coming Decline?” Contra Arnaud de Borchgrave, Thomas Friedman, and others, I argue that it is highly unlikely that China, Europe, or anyone else overtakes the United States as the major economic player in the world. The bottom line is that the current financial [...]
What do you get when you combine high oil prices, government subsidies on gasoline, and a financial crisis spreading around the world? You get Pakistan on the brink of insolvency: Officially, the central bank holds $8.14 billion (£4.65 billion) of foreign currency, but if forward liabilities are included, the real reserves may be only $3 [...]
We’ve reached the seemingly inevitable part of the campaign where the trailing candidates start hurling charges out of desperation and the leader responds in kind. In the closing days of 1992, President George H.W. Bush, ordinarily among the most decent, genteel fellows you’d ever meet, was running around calling Bill Clinton and Al Gore “bozos.” [...]
In this satirical video, British humorists John Bird and John Fortune, a/k/a “the Long Johns,” explain the financial crisis. It’s actually nearly a year old but it still works. Humor across the Pond is a tad different, not least of which is less fear of risking alienating racial sensibilities. The bit about the “poor black [...]
Congress has passed the bailout now that the three page bill has expanded in size a hundredfold and it has been larded with some good old pork: With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to [...]
As Dave Schuler has been predicting for a while now, the financial crisis is starting to hit state governments. California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal [...]
The New York Times reports on how the ripple effects of the credit freeze are beginning to trickle down to local economies. Cities, states and other local governments have been effectively shut out of the bond markets for the last two weeks, raising the cost of day-to-day operations, threatening longer-term projects and dampening a broad [...]
CNN’s Alex Mooney consults his network’s “poll of polls” and finds that, although nearly 60 million Americans watched last Friday’s debate between John McCain and Barack Obama, the race remains unchanged. The new polls are bad news for McCain, who with only five weeks until Election Day is quickly running out of opportunities to shake [...]
Writing for the Wall Street Journal, Min Zeng and Mark Gongloff report that in the wake of the failure to pass the bailout bill, overnight lending rates are ratcheting up–a trend which was already well on its way before the vote. But, as has often been the case during this crisis, credit markets are singing [...]
This video, called “Burning Down the House: What Caused Our Economic Crisis” (although, oddly, set to the tune of “Money for Nothing”) is apparently all the rage (at least in my wife’s office). It traces the subprime crisis to the Jimmy Carter era Community Reinvestment Act. To the extent this view is correct (and I [...]
Nate Silver compares the list of Representatives voting No on yesterday’s bailout bill with the list of swing districts — that is, those where the re-election of the incumbent is seriously in doubt — and finds a surprisingly strong correlation. VULNERABLE GOP = 3 YEAS, 17 NAYS (15%) OTHER GOP = 62 YEAS, 116 NAYS [...]
An interesting meme is developing among smart commenters from across the political spectrum that the House’s failure to pass the bailout bill demonstrates the soft underbelly of our political system itself. Ezra Klein: Above all, though, this is a failure of politics. Like with global warming, with health care, with the national debt, with immigration. [...]
Drudge reported that the Dow plunged 500 points. Something happened. I’ll post more as it comes in. Update: Looks like investors are fearing the bailout will not pass. Dow down now 700 points. Update II: I’ve heard several unconfirmed reportst that the bailout has not passed. One that it failed in the Senate and the [...]
While he doesn’t come right out and say so, I sense that Thoreau seems less than pleased with the bailout compromise: Screw it. The real divide in this mess is not rich-poor, it’s responsible-irresponsible. Whether you’re a moron who borrowed too much or a moron who loaned too much, you get taken care of. Screw [...]
Barry Eichengreen notes that the globalization and diversity of the current economy makes it much less amenable to easy government fixing than its Great Depression counterpart. On the other hand, we’re simply not going to see anything close to the economic devastation we saw during that era: [W]e are not going to see 25% unemployment [...]
It appears that House and Senate negotiators are on the verge of an agreement with the administration on a plan to address the financial crisis. Congressional negotiators and the Bush administration’s top Treasury officials go to work Sunday on settling the final details of a historic $700 billion Wall Street bailout aimed at keeping credit [...]
The House Republican alternative to the Senate compromise plan (I say this because the Paulson plan is, at this point, dead) is to be unveiled at noon today, so I’ll be interested to see what it contains. However, I can tell you that there’s at least one aspect unveiled so far that simply doesn’t make [...]
The South China Morning Post is reporting that the China Banking Regulatory Commission has instructed Chinese banks to stop loaning money to U.S. banks. Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday. The [...]