Macroeconomic Chutzpah by Krugman

Spain Is Not Out of the Woods Yet

Tested By A Picturesque Dystopia by Manohla Dargis

Confessed 4 Life

Bridget Regan replies to Seeker costar Craig Horner: "Sad I can't be there with you!"

Horner: "Seeker Fans, I will be visiting WonderCon in Anaheim California March 17th and 18th from 12pm till 3:30pm..."

Bernanke Denies Fed Rate Policy Caused Housing Bubble

Most evidence suggests the Federal Reserve‘s policy of low interest rates in the early 2000s didn’t cause the recent housing bubble, Chairman Ben Bernanke said Thursday in slides prepared for a college lecture.

While some have argued the Fed’s low interest rates in the early 2000s contributed to the U.S. housing collapse, international examples and the timing of the bubble show otherwise, Bernanke said Thursday in slides for the second of his four lectures at George Washington University this month.

For example, house prices rose sharply in the United Kingdom in the same time period, even though the U.K. had tighter monetary policy than the U.S., Bernanke wrote. He also noted housing prices began to pick up in the late 1990s before the Fed began cutting interest rates and rose sharply after the central bank began tightening.

Finally, Own-to-Rent by Jared Bernstein

Bernanke lecture video 2 of 4

Bernanke lecture video 1 of 4

review of Noam Scheiber's "The Escape Artists" by John Cassidy

(via Thoma)

How can debt effect GDP? by Noah Smith

(via Thoma)

Why Democrats Have a Problem With Young Voters by Rich Perlstein

My politics of optimism and hope still casts its lot with the Democrats — in the optimistic hope that the dying embers of its status as the party of our better angels, one that took risks for social justice, can still be fanned into a flame. But I'm an old man, born in 1969. I can't really blame someone born in 1991 for not buying the idea that the Democrats were once a party that often took political risks for social justice and can be again. Why should they believe me? They've never seen it in their lifetimes.

What's This "We" Jazz, White Man? Robert Samuelson Edition by Dean Baker

"Four years after the onset of the financial crisis — in March 2008 Bear Stearns was rescued from failure — we still lack a clear understanding of the underlying causes."

Wow, it sure doesn't seem very hard to me. The Reagan-Volcker policies of the early 80s broke the link between productivity growth and wage growth for ordinary workers. This meant that demand growth did not necessarily keep pace with output potential as had been true earlier in the post-war period, since higher wages would quickly translate into higher consumption. 

That created an environment which opened a door to speculative bubbles. In the 90s it was the stock bubble which drove growth, primarily by pushing saving rates to then record lows. In the last decade it was the housing bubble which drove growth, both by creating a building boom and also by pushing saving rates even lower as bubble generated home equity led to a consumption boom.
None of this story is new. I was writing about how the stock bubble was driving the economy in the 90s and how the housing bubble was driving the economy as early as 2002. And, I gave the historical picture in Plunder and Blunder: The Rise and Fall of the Bubble Economy.

But, folks like Robert Samuelson would rather pretend that the whole story is a great mystery rather than contemplate the possibility that the economic instability of the last decade had its roots in a pattern of growth that was built on redistributing income from ordinary workers to the most highly paid workers and corporate profits.

Kenyan Socialism endorses this narrative with some additions.

Robert Samuelson endorses the fatalistic, old-timey Mellon view of busts that the rottenness of economy needs to be purged.

Samuelson links to this review of 21 books on the crisis and this review of 16 scholarly papers (by Gary Gorton).

Bernanke endorsed Gorton's work on the rise of the shadow banking system.

The Baffler is back again.

Too Smart To Fail: Notes on an Age of Folly by Thomas Frank

Why Conservatives Are Still Crazy After All These Years by Rick Perlstein

(via Krugman)

On Goldman Executive Greg Smith's Brave Departure by Matt Taibbi

No Mercy for Ben Bernanke by Yglesias


Make Targets Robust to Human Error by Ryan Avent

The Villain by Roger Lowenstein

When Populism is Sound by Simon Johnson

(via Dean Baker)

Yes the elite's lap dogs in the media try to define it as being somehow demagogic and when politicians appeal to the least common denominator.

Obama Deserves Credit for the Recovery by Dean Baker

Muddled Economic Picture Muddles The Political One, Too by David Leonhardt

Face-ripping for fun & profit by Doug Henwood

Greg Smith's open letter to Goldman Sachs

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.(links in original)

I like that he links to Matt Taibbi's Vampire Squid Rolling Stone article.

Capitalism, 2012 by Tom Friedman

We also need a grand bargain between employers, employees and government — à la Germany — where government provides the incentives for employers to hire, train and retrain labor.

We can’t have any of these bargains, though, without a more informed public debate. The “big thing that’s missing” in U.S. politics today, Bill Gates said to me in a recent interview, “is this technocratic understanding of the facts and where things are working and where they’re not working,” so the debate can be driven by data, not ideology.

Friedman makes no mention of the housing bubble fiasco. My guess is that Capitalism 2012 will bring us repeat this time without bailouts unless the Republican party truly does fall apart.

An interesting theory of asset bubbles by Noah Smith

Larry Summers: The Wrong Person of World Bank President by Dean Baker