With the fullness of time, housing prices are due to revert to something approximating the mean of their historical relationship to rental prices and incomes, albeit with an overshoot probable. But how quickly we reach that level will be very much a function of how quickly foreclosures take place and real estate is disposed of. […]
Read more...Once a Cassandra, always a Cassandra? That seems to be William White’s fate. White, the former chief economist of the Bank of International Settlements, is best known for his warnings in 2003 that many advanced economies were in the grip of housing bubbles, which Greenspan pointedly ignored. Although he is now celebrated for that call, […]
Read more...Wolfgang Munchau in the Financial Times gives a good recap as to why the recent spell of good cheer regarding the Eurozone is overdone. His central observation is that the Eurozone, like the US, patched things up with duct tape and bailing wire, and the hope was that the resumption of peppy growth would reduce […]
Read more...This is a great interview of Tom Ferguson on Real News Network on the consequences of the “head’s I win, tails you lose” the financial sector has constructed with the rest of us, with Baltimore as object lesson. Enjy!
Read more...By Marshall Auerback, a portfolio strategist and Roosevelt Institute fellow A few years ago, Chris Dialynas and I wrote a piece which introduced the concept of “renegade economics”. It was derived from a Frank D. Graham’s 1943 essay titled, “Fundamentals of International Monetary Policy.” Graham, a Princeton University economist, wrote: “In international affairs we must […]
Read more...By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. The Federal Reserve Bank of Boston recently published a paper titled: “Reasonable People Could Disagree: Optimism and Pessimism About […]
Read more...By Kalpa, who blogs at big picture agriculture. Kalpa’s formal education was in medicine, science, and the humanities. Having seen the destruction that industrial agriculture has done to the biosystem of the Midwestern Plains, where she grew up, she writes on the comprehensive picture of economics in agriculture, ag science, ag policy, food security, energy, […]
Read more...Martin Wolf, in today’s Financial Times, argues that the eurozone has done wonders for Germany by allowing it to keep the value of its currency down. With Germany’s persistent, large trade surpluses, the value of the deutschemark would eventually have risen, dampening Germany’s trade surpluses and forcing it either to accept a higher level of […]
Read more...The end of the US summer holiday period is upon us, and with it, a return to reality. The markets are again concerned re Eurobanks, as the fears registered in EU periphery country bond spreads are now registering with investors in other markets. Per Bloomberg: The gaps between 10- year German bond yields and those […]
Read more...An interesting paper at VoxEU provides some empirical support for a commonsensical observation: that the pervasive use of limited liability structures for virtually all financial services activities creates “heads I win, tails you lose” dynamics. If you have no downside and can earn more by taking risk, then why not? While bad incentives like these […]
Read more...This post first appeared on March 24, 2008 The comments in the Financial Times by Yoshimi Watanabe, Japan’s financial services minister, are extraordinary. He ventured to give the US advice on its credit crunch based on Japan’s experience during its post-bubble-years banking crisis. And it’s not pretty. Why are these remarks so unusual? Consider: Most […]
Read more...Is a stealth shift in policy afoot, to find the bottom in the housing market by getting banks to start clearing out their foreclosed and “ought to be foreclosed” exposures? On Tuesday, Fannie Mae announced that it was not longer giving servicers free rein, and was clamping down on multiple fronts, such as procedures and […]
Read more...Via Bloomberg: View the segment here.
Read more...As much as this blog was a persistent critic of the US version of the stress tests, I must hand it to the folks at the Treasury: they did an impressive job of dressing up and selling a garbage barge. The combination of consistent cheerleading, extend and pretend, and a few short squeezes did wonders […]
Read more...By Andrew Horowitz of The Disciplined Investor As discussed in a previous post, the September month has not been kind to investor’s. However, equities have seemingly found some confidence straight out of the gate, so far. The Unemployment numbers released by the Bureau of Labor Statistics will be the tell tale sign of continued strength […]
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