Assorted Links

I didn’t get much news intake done today, at least not as much as I’d like.

  • Monetary Policy: Rules vs Discretion. I think you probably know where I stand.
  • Paul Krugman: “The Fed has already failed. Zero rates forever.” Also, he takes on hawkishness.
  • Arnold Kling on the evolution of unprofitable banking. *Translation: Smackdown!

    With all due respect*, one should ask why “old banking” became unprofitable in the 1980’s. I would suggest that the Basel capital accords made it so, and this was a bootleggers and baptists story. The baptists were regulators who wanted to avoid another savings and loan crisis. The bootleggers were politically powerful financial firms (Freddie, Fannie, Wall Street firms, big banks) who wanted a bigger piece of the mortgage pie.

  • Why the theory of “over-leveraged” households does not explain the recession. I don’t think he goes far enough in explaining the absolute absurdity of the “overproduction theory of recession”.
  • Nick Rowe on search theory and multiple equilibria.
  • Headline of the day: “A Debt Crisis Wouldn’t Be a Debt Crisis Without Argentina.”
  • FDIC Net Worth: -$20.9bn. Not to worry, they get an explicit bailout; so they can continue to wreak havoc on financial architecture (bricks and mortar, not numbers and spreadsheets).
  • It’s always an emotional roller-coaster with Barack Obama. Yay free trade =]! Tariffs =[. Price controls =[?! Being the first leftist to propose using anti-trust in a positive way =D (never mind the author)!!!

    Astonishingly, the health insurance industry is exempt from federal antitrust laws, which is why a handful of insurers have become so dominant in their markets that their customers simply have nowhere else to go. But that protection could soon end: President Obama on Tuesday announced his support of a House bill that would repeal health insurers’ antitrust exemption, and Speaker Nancy Pelosi signaled that she would put it toward an immediate vote.

    I await further disappointment.


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