That’s the title of an article I wrote for the UCSD Economics Department’s Economics in Action, which I reproduce below.
Category Archives: financial markets
Should the Fed be the nation’s bubble fighter?
That’s a question recently taken up by
the Wall Street Journal. Here are my thoughts.
Debt and Interest Rates: Some Empirical Evidence and Implications
Today’s NYT article suggests apocalypse (very) soon:
…the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
Do we really need to worry so much in the short term?
Commodity inflation
Why are the prices of so many commodities rising in an economy that seems to remain quite weak?
Consequences of the Lehman failure
William Sterling of Trilogy Global Advisors has an interesting new paper on the abrupt changes in financial markets subsequent to Lehman’s bankruptcy on September 15, 2008.
Futures As Predictors of Commodity Prices
As commodity prices start rising again — at least some — the question of whether futures are useful indicators seems relevant. Figure 1 shows the IMF commodity price indices, as reported in the October World Economic Outlook:
Improving financial regulation and supervision
There were some other very interesting presentations at the conference hosted by the Federal Reserve Bank of Boston last week. Fed Chair Ben Bernanke spoke on Financial Regulation and Supervision after the Crisis while Princeton Professor Alan Blinder’s message was It’s Broke, Let’s Fix It: Rethinking Financial Regulation. Here I summarize four key reforms these speakers addressed.
Guest Contribution: The Wisconsin Foreclosure and Unemployment Relief Plan (WI-FUR)
By Morris A. Davis
Today, we’re fortunate to have Morris A. Davis, Assistant Professor of Real Estate and Urban Land Economics at University of Wisconsin School of Business, as a guest contributor.
Research by economists inside the Federal Reserve system have shown that two events typically lead homeowners to default on their mortgage (see here). First, the value of the house must be less than the value of the mortgage (“under water”). This is necessary but not sufficient (see here). Second, homeowners must experience a significant disruption and loss of income. The available data suggest there might be a big increase in foreclosures in the immediate future. Zillow estimates that 22 percent of the 50 million homeowners with mortgages are currently under water; unemployment rates are high and are expected to remain high for the next two years.
Economy improves but concerns remain
Last week we received positive readings for some key economic indicators. But I still see plenty to worry about.
Regulating compensation in the banking sector
I see a good case for this, but also some big things to worry about.