Banking's Past, Present, and Future
In case you have been asleep for the last couple of days, the sovereign debt rating of the United States was downgraded on Friday has been downgraded by the Standard and Poor’s (S&P) from AAA to AA+. This has not made S&P too popular in some quarters, particularly in the US government. President Obama and … Read more
Apparently, the editors of the Wall Street Journal have a rule about the number of op-eds each week that praise Ronald Reagan. I haven’t figured out the exact count yet, but Robert Barro’s piece in Monday’s Journal gets the paper off to a nice start on their weekly quota. It’s a pity that there are … Read more
Writing in Friday’s Wall Street Journal, Stanford professor Edward Lazear argues that the real danger to the American worker is too much government–in other words: too many taxes and too much spending. Prof. Lazear writes: During the debt-ceiling debate, President Obama characterized his push for higher taxes and less aggressive budget cuts as being helpful … Read more
I cannot let this day end without acknowledging the 145th anniversary of the failure of Overend, Gurney, and Company, which set off one of the 19th century’s more spectacular financial crises. Writing the day after the failure, the Times of London argued that the firm could,”…rightly claim to be the greatest instrument of credit in … Read more
Speaking to the Economic Club of New York House Speaker John Boehner (R-OH) said: It’s true that allowing America to default would be irresponsible. But it would be more irresponsible to raise the debt limit without simultaneously taking dramatic steps to reduce spending and to reform the budget process. Wrong. Defaulting would be irresponsible. It … Read more
John Taylor’s op-ed in today’s Wall Street Journal bashes the White House budget proposals of February 14 and April 13 and lauds the House Republican budget proposal of April 5. I understand–or am coming to understand–that when writing for a non-specialist audience, a certain amount of simplification is necessary: I’m guessing that the Journal has … Read more
I am devastated. Writing in the Financial Times today, Alan Greenspan, argues that the Dodd-Frank Wall Street Reform and Consumer Protection Act will have–indeed is already having–unintended consequences. He cites five specific cases. 1) Making credit ratings agencies legally liable for their opinions about risk made them unwilling to give Ford Motor Credit a rating … Read more
Earthquakes, tsunamis, and nuclear accidents are low probability-high cost events. So are financial crises. There is nothing we can do to prevent earthquakes and tsunamis. Sure, with improving technology, we are sometimes able to get a bit of advance warning. And we can design structures that are more resistant to natural disasters. For the most … Read more
The tragedy unfolding in Japan at the moment is of unfathomable proportions. Natural disasters, nuclear disasters, and a great deal of worry that the worst is not yet passed. This is, of course, not the first time Japan has been rocked by a devastating natural disaster. The Great Kanto Earthquake, a severe quake of 7.9 … Read more
I do. The Financial Times reports today that Northern Rock will begin making loans against 90% of a property’s value as early as Monday. Northern Rock, which was established 30 years ago as the result of a merger between two large British building societies (roughly equivalent to savings and loans), was bailed out almost exactly … Read more