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Category Archives: fiscal and monetary policy
Hank Paulson, Revisionist
Did you know that Hank Paulson is one of the most powerless finance ministers in the world? While his counterparties in other countries feel responsible for saving systemically-important banks, Paulson’s hands, until recently, were tied, and he could do nothing … Continue reading
Posted in fiscal and monetary policy, Politics
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Ben Bernanke, Revisionist
This, from Ben Bernanke, is disingenuous: The difficulties at Lehman and AIG raised different issues. Like the GSEs, both companies were large, complex, and deeply embedded in our financial system. In both cases, the Treasury and the Federal Reserve sought … Continue reading
Posted in bailouts, fiscal and monetary policy
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Paulson’s Failure
Why am I not reassured by Hank Paulson’s latest press conference? "We’re going to do it as soon as we can do it and do it properly and do it effectively and right," Paulson said. "Trust me, we are not … Continue reading
Posted in bailouts, fiscal and monetary policy
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Recapitalization and the Implicit Treasury Guarantee
Tyler Cowen has a very good question: Treasury equity is not the same as debt to the Fed, but are they so different? In some ways the Fed’s I-can’t-just-stop-rolling-it-over-when-I-want contribution is a bit like preferred equity. I think main key … Continue reading
Posted in bailouts, fiscal and monetary policy
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The Guarantee Plan
The bad news is that Hank Paulson seems to have run out of ideas. The good news is that, with no bright ideas of his own, he’s turning to the bright ideas of Gordon Brown: first direct equity injections into … Continue reading
Posted in bailouts, fiscal and monetary policy
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Should the Fed Target Libor?
Many thanks to Colin Barr, who saw my question about how we can bring down Libor and pointed me to a recent essay by Edwin Truman with a very specific proposal about doing just that. Truman takes the very direct … Continue reading
Posted in bonds and loans, fiscal and monetary policy
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How Much Will a Wells-Wachovia Deal Cost Taxpayers?
Anybody following the fight between Citi and Wells Fargo has to read Binyamin Appelbaum’s front-page piece in the Washington Post on the tax assumptions behind the Wells Fargo offer. In touting the deal, Wells Fargo executives said they did not … Continue reading
Posted in banking, fiscal and monetary policy, M&A, taxes
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Sell Signal of the Day, Greenspan Edition
Alan Greenspan’s calling a bottom: Former Federal Reserve Chairman Alan Greenspan said financial markets and the economy will recover "sooner rather than later" from the worst turmoil in seven decades. "Trust will eventually reemerge as investors dip hesitantly back into … Continue reading
Posted in fiscal and monetary policy
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Should the Bailout Reduce Other Government Spending?
The most annoying part of the first presidential debate, for me, was when the moderator, Jim Lehrer, asked the same question three times. Basically, he said that if you’re spending $700 billion on a financial bailout, then you’re going to … Continue reading
Posted in fiscal and monetary policy
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Should Paulson’s Fund Welcome Outside Investors?
Here’s an idea I probably haven’t thought through properly, but shouldn’t outside investors be not only allowed but welcome in the new fund being set up by Hank Paulson? The fund is, after all, a distressed-debt fund at heart, and … Continue reading
Posted in fiscal and monetary policy
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The Bumpy Ride Ahead
Dealbreaker has a most germane chart of what happened when Pakistan banned short selling: a brief and large rally, followed by a slow and devastating collapse. Could the same thing happen with the US stock market? Absolutely, yes. Banning short-selling … Continue reading
Posted in fiscal and monetary policy, regulation, stocks
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Getting Through the Weekend
The latest move in the fiscal and monetary response to the global financial crisis has been to flood the world with money. The Fed boosted its U.S. dollar swap line with foreign central banks by $180 billion…. The Fed also … Continue reading
Posted in banking, fiscal and monetary policy
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America’s Ad Hoc Fiscal and Monetary Policy
What is this Supplementary Financing Program, under which Treasury is essentially lending money to the Fed? Does it mean that the Fed’s run out of money, as Paul Murphy would have it? Does it mean, pace Tyler Cowen, that central … Continue reading
Posted in fiscal and monetary policy
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Libor + 850bp
It’s done. The US government is bailing out AIG to the tune of $85 billion. But boy is it an expensive loan: Interest will accrue on the outstanding balance at the three-month London interbank offered rate plus 8.5 percentage points. … Continue reading
Posted in fiscal and monetary policy, insurance
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Why Treasury Shielded Frannie’s Sub Debt
Yet another peculiarity of the credit crunch: the WSJ editorial page seems to be in full agreement with Nouriel Roubini. The subject: Frannie’s sub debt, which was shielded from any haircut by Hank Paulson’s bailout. In structuring his rescue, Treasury … Continue reading
Posted in fiscal and monetary policy, housing
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Trusting Uncle Sam
Arnold Kling has a cute response to my blog entry on the Social Security trust fund: A trust fund = an obligation to borrow? If your uncle Louie told you he was setting up a trust fund for you, and … Continue reading
Posted in economics, fiscal and monetary policy
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How to Think about the Social Security Trust Fund
If you want to start a heated debate among policy wonks, just ask them about the Social Security trust fund. A large contingent of people will tell you that it’s real government debt; another large contingent will tell you that … Continue reading
Posted in economics, fiscal and monetary policy
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Drilling for Revenues
Free Exchange has it right, I think, and Tyler Cowen is being needlessly self-abnegating. Drilling for US oil might well make sense as a matter of fiscal policy, especially for Alaska; it gets us nowhere fast as a an "energy … Continue reading
Posted in climate change, commodities, economics, fiscal and monetary policy
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$250,000 per Year Counts as Rich
Slate’s Moneybox column is mostly home to Dan Gross, but occasionally other people write for it too. Back in May, it was fine for Sam Grobart and Tara Siegel Bernard to write that "for a family of four living in … Continue reading
Posted in fiscal and monetary policy, pay, Politics, wealth
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Barack Obama, Economic Policy Wonk
David Leonhardt has a must-read piece on Barack Obama’s economic policy in this weekend’s NYT Magazine. It’s long (over 8,000 words), and even so it doesn’t tease out all the implications of, say, Obama’s 100%-auction cap-and-trade system on US fiscal … Continue reading
Posted in fiscal and monetary policy, Politics
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Why Greenspan Won’t Shut Up
Welcome, Caroline Baum, to the please-Mr-Greenspan-shut-up society. There is something unseemly about Greenspan’s conduct. Former presidents don’t criticize U.S. foreign policy during times of war, Jimmy Carter notwithstanding. The same unspoken rule should apply to economic policy… So here’s my … Continue reading
Posted in fiscal and monetary policy
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Incentives for Inflation
Steve Waldman explains that America’s net-debtor position (both at the sovereign and at the individual level) means that there’s a lot of pressure towards inflation: Inflation helps debtors at the expense of creditors. In democracies where those who can vote … Continue reading
Posted in fiscal and monetary policy
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Laughing at Alan Greenspan
I’m no big fan of Alan Greenspan or his pronouncements, especially those where he tries to persuade us that he wasn’t wrong in the past, he was right. There’s a classic example in his latest interview with David Wessel: In … Continue reading
Posted in fiscal and monetary policy, housing, immigration
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Please, Mr Greenspan, Shut Up
If ever there was a need for gag orders on former central bank chairmen, it is now. Actually, scrap that: if ever thre was a need for a gag order on Alan Greenspan, it is now. The rest of them … Continue reading
Posted in fiscal and monetary policy
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