Over the New York Times Magazine, Paul Krugman has today’s must-read economics article on the fate of Europe. (Today’s in the physical world; it’s been up electronically for several days.) Krugman walks through various ways that struggling Eurozone members might adjust to their ongoing financial crisis. Along the way, he emphasizes a key point: American [...]
Archive for the ‘Finance’ Category
Europe and the Financial Crisis
Posted in Economy, Finance, International, Macroeconomics, tagged Finance, International, Macroeconomics on January 16, 2011 | 1 Comment »
Federal Reserve Earned $81 Billion in 2010
Posted in Budget, Finance, Macroeconomics, tagged Budget, Federal Reserve, Finance on January 11, 2011 | 2 Comments »
The Federal Reserve system is doing its part to cut the budget deficit. The central bank earned $81 billion in fiscal 2010, of which a bit more than $78 billion will be remitted to the Treasury. That’s $31 billion more than last year. According to the Fed’s news release yesterday, the following items drove profits: $76.2 billion [...]
CBO Weighs in on Fannie and Freddie
Posted in Budget, Finance, Regulation, tagged CBO, Fannie Mae, Finance, Freddie Mac, GSE, Housing, Regulation on December 23, 2010 | 1 Comment »
Yesterday, the Congressional Budget Office released its long-awaited report on the future of Fannie Mae and Freddie Mac. Fannie Mae, Freddie Mac, and the Federal Role in the Secondary Mortgage Market (written by Deborah Lucas and David Torregrosa, with input from a cast of dozens — including, full disclosure, me as an outside reviewer) provides an [...]
A Second Thought on the Cost of TARP
Posted in Budget, Finance, tagged AIG, Auto, Banks, Budget, CBO, Finance, TARP on December 1, 2010 | 3 Comments »
Two commenters (Jack B. and John L.) raise an important point about the $25 billion price tag that the Congressional Budget Office recently placed on the Troubled Asset Relief Program. Their concern is that the $25 billion figure includes some impacts that should rightfully be attributed to other government actions, not to TARP itself. To illustrate, suppose that [...]
How Much Did TARP Cost? $25 Billion
Posted in Budget, Finance, tagged AIG, Auto, Banks, Budget, CBO, Finance, TARP on November 29, 2010 | 15 Comments »
The much-maligned TARP program will cost taxpayers only $25 billion according to the latest estimates from the Congressional Budget Office. That’s substantially less than the $66 billion CBO estimated back in August or the $113 billion that the Office of Management and Budget estimated in October. The good news, budget-wise, is that the government is [...]
Positive Feedback and the Flash Crash
Posted in Finance, Regulation, tagged Finance, Regulation, Stock Market on October 1, 2010 | 4 Comments »
The CFTC and SEC staffs are out with their analysis of the May 6 “flash crash.” Short version: A large trader (identified by the media as Waddell & Reed) initiated a large sell order to be executed based on volume, not time or price. The initial selling boosted trading volumes which prompted the algorithm to sell [...]
Another Observation on the Yield Curve
Posted in Finance, Microeconomics, tagged Finance, Interest Rates, Macroeconomics, Recession on August 29, 2010 | 1 Comment »
As a follow-up to my recent post about recessions and the yield curve, reader Joan F. points us to a piece by the FT’s James Mackintosh. The money quote: [T]hose keeping faith in recovery also point to the fact that the yield curve has not inverted – 10-year bonds still yield 2 percentage points more [...]
The Yield Spread and the Odds of Recession
Posted in Finance, Macroeconomics, Uncategorized, tagged Finance, Interest Rates, Macroeconomics, Recession on August 26, 2010 | 2 Comments »
Worries about a double-dip recession have spawned much economic commentary … and a humorous country and western song. So how likely is a return to recession? Researchers at the San Francisco Fed took a crack at this question a few weeks ago. Their answer? It depends. When they used a traditional model based on the [...]
Investors Should Be Prepared to Face Financial Oppression
Posted in Budget, Finance, International, tagged Bonds, Budget, Debt, Deficit, Finance on August 25, 2010 | 3 Comments »
That’s the conclusion of a new report by Morgan Stanley analyst Arnaud Mares. And what, you may ask, is financial oppression? Speaking from the perspective of investors in sovereign debt, Mares defines it as “imposing on creditors real rates of return that are negative or artificially low.” Which doesn’t require outright default. Instead, it [C]an [...]
It’s Back-to-School Season, Time to Lay Your Bets
Posted in Behavioral Economics, Finance, Microeconomics, tagged Adverse Selection, Insurance, Microeconomics, Moral Hazard, Teaching on August 10, 2010 | 1 Comment »
According to an article over at the Huffington Post (ht Natalie), students at 36 colleges will have a new option when they start classes this fall. Thanks to an outfit named Ultrinsic, students can now bet on whether they will get good grades. Students put up money at the start of the semester and then [...]
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