Credit Crunch
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“…in the great booms and depressions, each of the above named factors (over production, underconsumption, over capacity, price dislocation, over confidence, over investment, over saving etc.) has played a subordinate role as compared with two dominant factors, namely, over indebtedness to start with and deflation following soon after;… where any of the other factors do become conspicuous, they are often merely effects or symptoms of these two.” (Irving Fisher, 1933, p. 341) Economists read the literature about the Great Depression with deep intellectual curiosity and savour in particular the still ongoing debate about its causes and remedies.
Crisis lessons from Irving Fisher
The credit crunch may cause another great depression | vox - Res
Back in June 2008 I wrote a piece for VOXEU predicting a mild recession in 2009.
With just a few words in his Senate confirmation hearing, U.S. Treasury Secretary Timothy Geithner resurrected the long-held American accusation that China's penchant for money management is hurting the U.S. economy. President Obama -- backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency, Geithner wrote in his prepared remarks. As the argument goes, an undervalued Chinese currency makes the country's exports artificially cheap, giving Chinese goods an unfair competitive edge. Reduced demand for American goods hurts U.S. manufacturers and limits the size of the U.S. job market. China is taking jobs from the American heartland.
Foreign Policy: Why China's Currency Manipulation Doesn't Matter
Macro and Other Market Musings: It Was the Saving Glut?
An increasing number of observers are placing the origins of the current economic crisis with the saving glut explanation of global economic imbalances.Econbrowser: The paradox of thrift
Or, how come you used to say that if consumers don't save more, it will wreck the economy, and now you say, if consumers do save more, it will wreck the economy? For the record, I am certainly among those who had been suggesting that America's low saving rate was a significant problem. Let me begin by reviewing why I said that.
Perhaps the Obama administration will be able to bring a surprisingly early end to the ongoing U.S. financial crisis. We hope so, but it is not going to be easy. Until now, the U.S. economy has been driving straight down the tracks of past severe financial crises, at least according to a variety of standard macroeconomic indicators we evaluated in a study for the National Bureau of Economic Research (NBER) last December.
Opinion: Expect a Prolonged Slump - WSJ.com - Mozilla Firefox
Mortgage Rates Likely Headed to 4.5%: Pimco's Gross - Economy *
Government action to shore up the economy and improve the housing climate probably will send mortgage rates to 4.5 percent, Bill Gross, co-CEO at the Pimco bond fund, said Monday. In addition to driving down mortgage rates and stimulating home-buying, the government's efforts also could include a move to cap Treasurys rates to encourage investors to take more risk, Gross said during a live interview on CNBC. "I think at some point we're going to see a 4.5 percent mortgage rate and the 10-year Treasury rate capped at some level," he said. "When the Fed comes in to buy Treasurys that will be a big day."
by CalculatedRisk on 4/26/2009 11:57:00 AM Note: I took some short cuts to make this simple - think of this conceptually .
Calculated Risk: Bank Balance Sheet: Liquidity and Solvency, Par
Economics and the crisis of 2008
The global crisis is also a critical opportunity for the discipline of economics – an opportunity to disabuse ourselves of notions we should not have so gullibly accepted.
A New Depression? The Lessons of the 1930s | Jeff Frankels Weblo
We often hear the question “isn’t this economic crisis becoming as bad as the Great Depression?”TheMoneyIllusion » Richard Rorty and the efficient markets debat
I use the efficient markets hypothesis in my research and in my blog. Once I started looking at the world through the EMH lens, I found it much easier to understand the relationship between policy and the financial markets—particularly in my research on the Depression. Here I’d like to do three things; indicate why I believe markets are more efficient than they seem, acknowledge that there are events that look like market inefficiency, and then argue that those perceived inefficiencies, even if real, don’t have the policy implications that many people assume they have. Last Sunday I discussed cognitive illusions, aspects of economic theory that are highly counter-intuitive. I regard the EMH as one such economic theory—strange, but (almost) true. Let’s start with all of the studies showing market inefficiency.Floyd Norris writing in the NY Times reminds us that the problems in the U.S. financial sector are far from over: The loans went to borrowers who might never before have been allowed to borrow. When they found repayment difficult, they were permitted to refinance their loans, generating fees for the lenders and postponing the ultimate reckoning.
Macro and Other Market Musings: Far From Over - Mozilla Firefox
The crisis and how to fix it: Part 1, causes | vox - Research-ba
This is a financial crisis to remember.Sind Banker Scharlatane?
Great pearltree, the US recession is also very interesting! Looking forward to learn about the economi news! by Elrring Peace Mar 1