Monthly Archives: November 2009

By Thomas Palley

There is widespread recognition that the financial crisis which triggered the Great Recession was significantly due to financial excess, particularly in real estate lending. Now, policymakers are looking to reform the financial system in hope of avoiding future crises. But like the drunk who looks for his lost keys under the lamppost because that is where the light is, policymakers remain fixated on capital standards because that is what is already in place. Read more

From the FT:
Not all bubbles present a risk to the economy
- Frederic Mishkin
European banks strive to delay capital reforms – Patrick Jenkins
Banks face high costs as £4,000bn short-term debt refinancing looms – Francesco Guerrera & Nicole Bullock

From elsewhere:
Counting the jobs produced by the stimulus
- Gary Burtless, Brookings
Asia’s corporate saving mystery – iMFdirect
Trading this crisis for the next – Naked Capitalism Read more

Alan Johnson, home secretary, has recently admitted that the government has been “maladroit” in its handling of immigration. This is British understatement. It has been dishonest: it has pursued a radical policy, with profound consequences, on weak grounds, without serious debate. That is why the British National party is on BBC television. Read more

From the FT:
Inequity injection – Editorial
Chaotic evolution defines the market economy – John Kay
Lending must support the real economy – Dirk Bezemer

From elsewhere:
What Would Have Happened If World Governments Had Washed Their Hands of the Financial Crisis? – Brad DeLong
‘Tax cuts and recoveries’ – Mark Thoma, Economists’ View
The roots of the coming crash – Felix Salmon, Reuters
The satisfied Fed – The Economist’s Free Exchange
Aristotle as an IMF economist: Asia’s difficult balancing act – Anoop Singh, IMF Direct
Too-big-to-fail: Regulatory reforms of systemically important institutions – Elisa Parisi-Capone, Nouriel Roubini’s EconoMonitor

Pinn illustration

If we are to understand where we are, we must understand where we have
been. This is particularly true if we are to escape from the huge
fiscal deficits being run by many governments. These deficits are not
the result of government stupidity; they are mainly a consequence of –
and response to – private behaviour. We must not ignore this connection. Read more

From the FT:
Mother of all carry trades faces an inevitable bust – Nouriel Roubini
A fruitless clash of economic opposites – Edmund Phelps
Tame the markets to make capitalism ethical
- Ken Costa
We must not be too late with starting the Big Exit - Wolfgang Münchau
Capital controls – Krishna Guha,
FT Money Supply

From elsewhere:
How to live in a bubble - The Economist’s Free Exchange
The Puzzle of Asia’s Rapid Rebound – Anoop Singh via IMFdirect
What rebalancing of Chinese and American consumption? – Michael Pettis
Bullish data, recoveries, crashes and the psychology of forecasting redux - Edward Harrison of Credit Writedowns via Naked Capitalism
Government guarantees on bank funding: Should we extend them into 2010 despite the improved bank profitability and the schemes’ distortionary effects? – Aviram Levy and Fabio Panetta via VoxEU