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Calculated Exuberance: Safe Assets, MBS, and Sovereign Debt

http://calculatedexuberance.blogspot.com/2012/01/safe-assets-mbs-and-sovereign-debt.html

Monday, January 2, 2012. Safe Assets, MBS, and Sovereign Debt. David Beckworth kindly links. To my last post on safe assets:. Gupta also makes some other points, but this is his main one. His point sounds reasonable, but I wonder how important this effect is explaining the overall trend. As I mentioned in my previous post. This is a fair point. It’s tough to figure out how important Basel regulations might be relative to all of the various other factors driving the use of AAA-rated securities. How Europe...

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Calculated Exuberance: Fault Lines Review

http://calculatedexuberance.blogspot.com/2010/06/fault-lines-review.html

Tuesday, June 15, 2010. Raghuram Rajan, a professor at the University of Chicago Booth School of Business, has become famous for his prescient warning in 2005 of a possible future financial meltdown. Many of his views vindicated, he has written a new book, Fault Lines, which offers a more definitive account of the structural problems in global political economy that make financial crises all but inevitable. For part of the subsequent housing bubble). As Rajan notes, Clinton also increased the share o...

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Calculated Exuberance: Delevering

http://calculatedexuberance.blogspot.com/2011/10/delevering.html

Saturday, October 8, 2011. Matt Rognile takes aim. At people claiming “deleveraging” is an important reason behind the prolonged downturn:. Evidence that real interest rates are too high. That’s what every macro model tells us is associated with contractionary policy by the Fed. Yet we see pundits lost in all kinds of complicated, small-bore proposals to stimulate the economy—when the fundamental, overriding dilemma is getting the price (in this case, the interest rate) right. Elsewhere, he argues. I thi...

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Calculated Exuberance: Individualism and the State

http://calculatedexuberance.blogspot.com/2012/01/individualism-and-state.html

Sunday, January 15, 2012. Individualism and the State. Robin Waterfield's Dividing the Spoils. Focuses on the dawning of the Hellenistic Age after the death of Alexander the Great. He observes:. One of the most striking aspects of the Hellenistic period, by comparison with what came earlier, is its focus on the human individual. Social historians agree with historians of philosophy, art, and literature that this phenomenon is characteristic of the age. Waterfield goes on to observe how Hellenistic philos...

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Calculated Exuberance: September 2012

http://calculatedexuberance.blogspot.com/2012_09_01_archive.html

Tuesday, September 18, 2012. I thought I'd start linking to pieces I write elsewhere. Here's a backlog of recent articles:. The growing clout of central banks. Election has big banks in crosshairs. More to the financial crisis than just subprime. Dartmouth Atlas vs. Teacher Salaries. Cut Taxes for the Long-Run Unemployed. Counterfactuals and Country Comparisons. The Premium to Top Schools. Federal Lines of Credit. Response to Saez-Piketty on Inequality. Saez and Diamond on Taxes. Labor Supply and Taxes.

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Calculated Exuberance: Household Stagnation

http://calculatedexuberance.blogspot.com/2011/02/household-stagnation.html

Sunday, February 20, 2011. I've been meaning to comment on Tyler Cowen's ebook The Great Stagnation. For a while. The book relies heavily on two claims: 1) There has been a dramatic slowdown in productivity in the past 40 years, attributable to us exhausting all the low-lying fruit; and 2) Household income has similarly fared poorly in this period. I can't really comment on 1), which I grant seems true enough. But I've written. Some on 2), relying on the work of Terry Fitzgerald. Fewer people live in eac...

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Calculated Exuberance: The Federal Reserve and Stagnating Wages

http://calculatedexuberance.blogspot.com/2011/11/federal-reserve-and-stagnating-wages.html

Sunday, November 27, 2011. The Federal Reserve and Stagnating Wages. About stagnating household wages in the US. My sense is that while wages have stagnated in recent decades, the growth living standards have not, and issues in the provision of government goods, education, and healthcare have a lot to do with why growth in income isn't keeping up with growth in real consumption spending. Mike Konczal has proposed. One different explanation centered on the recent behavior of the Federal Reserve:. The post...

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Calculated Exuberance: Are Capital Markets Inherently Risky?

http://calculatedexuberance.blogspot.com/2011/08/are-capital-markets-inherently-risky.html

Monday, August 22, 2011. Are Capital Markets Inherently Risky? A new NBER paper. By Michael Bordo, Angela Redish, and Hugh Rockoff look further into the causes of the superior performance of the Canadian Banking system:. The consequence was that the systemic risk that led to the crisis of 2008 was not contained. The authors argue that this led to something of an inbuilt American national bias to rely on capital markets - culminating recently with structured products like mortgage-backed securities. I...

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Calculated Exuberance: More on Repos

http://calculatedexuberance.blogspot.com/2012/01/more-on-repos.html

Monday, January 2, 2012. After my last post on this, I went to look up some more facts on the repo market. This issue concerns not only the importance of "safe assets," but also the role of the repo market failure in precipitating further financial market instability. I ran into a paper. By Krishnamurthy, Nagel, and Orlov that provides new data and presents a revisionist take on the role of repo in the shadow banking system. Here are some principal quotes:. Taken together with our findings of the relativ...

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Calculated Exuberance: Is There a Global Shortage of Safe Assets?

http://calculatedexuberance.blogspot.com/2011/12/is-there-global-shortage-of-safe-assets.html

Monday, December 26, 2011. Is There a Global Shortage of Safe Assets? David Beckworth has channeled Gary Gorton to write. One of the key problems facing the world economy right now is a shortage of assets that investors would feel comfortable using as a store of value. There is both a structural and cyclical dimension to this shortage of safe asset problem, with the latter being particularly important now given the recent spate of negative economic shocks to the global economy…. Beckworth tallies up the ...