Banking's Past, Present, and Future
Here are a couple of recent musings on Libor. “Bankers Should Take A Lesson From The Mob,” was slated to appear in today’s Hartford Courant. “5 Questions With . . . Richard Grossman on the Libor Scandal,” an interview with Lauren Rubenstein, appeared in the Wesleyan Connection a few days before.
Writing nearly 40 years ago, historian Ernest R. May warned of the dangers of misusing history for policy purposes. May was primarily concerned that policy makers drew the wrong lessons from the past. In their opinion piece in yesterday’s Wall Street Journal, Glenn Hubbard, dean of Columbia Business School and an advisor to Mitt Romney, … Read more
Writing in Thursday’s Wall Street Journal, John Taylor takes the Federal Reserve to task for its “interventionist” behavior. Taylor’s main complaint with the Fed’s conduct of monetary policy is that it is unstable and unpredictable (verging on the whimsical!). He argues that this stems in part from the Fed’s mandate to pursue low unemployment in … Read more
Since the outbreak of the subprime meltdown, the Federal Reserve has shown itself ready, willing, and able to adopt unconventional monetary policies in order to reverse the downturn ushered in by the financial crisis. Recent Fed innovations have included quantitative easing in order to inject more money into the economy, intervention in the debt market … Read more
Republicans and Democrats are arguing over how many regulations we should add—or remove—from the financial services industry. Before we think about altering the regulations, we should think about enforcing the ones we currently have. Ever since the sub-prime meltdown erupted during 2008, politicians on both sides of the aisle have taken aim at the rules … Read more
Hungary’s new constitution came into force on January 1. This was not good news. Engineered by Prime Minister Viktor Orbán’s Fidesz party, the new constitution has a number of unsavory elements. The Constitutional Court, which serves as a check on government power, has been weakened in several ways (e.g., packing it with new judges, having … Read more
The Financial Times reported this week on a study by the Chartered Financial Analyst Society of the UK that argues that “financial amnesia” among institutional investors–particularly a failure to heed the lessons of past bubbles–has contributed to the global financial crisis. The answer, according to the Society’s report, is that the study of financial history … Read more
The Financial Times reports that Andreas Georgiou, the head of the independent Greek statistical agency Elstat, is facing a criminal investigation for allegedly inflating the scale of the country’s fiscal crisis and “acting against the Greek national interest.” Georgiou, who worked at the International Monetary Fund for 20 years, was appointed in 2010 by agreement … Read more
Writing in Thursday’s Financial Times, Pimco chief executive and chief investment officer Mohamed El-Erian argues that Europe’s first order of business should be to recapitalize its banks. It is hard to argue with this prescription. With the finances of Greece, Portugal, Spain, and Italy in dire straits and banks across the continent up to their … Read more
Writing in today’s Wall Street Journal about how to reduce government spending, Columbia University economist and former chairman of George W. Bush’s Council of Economic Advisors R. Glenn Hubbard chooses to disregard some important facts. According to Hubbard, “President Obama’s answer is higher taxes.” Well, not exactly. What President Obama proposed was a combination of … Read more