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Finance & Markets Channel: Latest Posts
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Great Leap Forward
Banks Don’t Commit Fraud; Banksters Commit Fraud: Response to Yglesias
The often interesting Matthew Yglesias wonders “Are Banks Too Big To Prosecute?” See here. Here’s his thesis. Sure, Megabanks committed tons of fraud. But we cannot prosecute banks for the fraud because that would bring them down. And the bigger they are, the more fraud they perpetrated, but the bigger the insolvency hole if we [...]
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Finance & Markets
The Most Common Error in Stock Market Research
There is a very common research mistake. It is pervasive in Wall Street research, even that presented by the big-name firms. My academic friends are not immune, partly because they have their own set of incentives. My mission in this post is fourfold: Explain the problem in a way that it can be readily understood; [...]
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Finance & Markets
Why is There Still a Shortage Safe Assets?
JP Koning wants to know why many of us continue to talk about a safe asset shortage five years after the financial crisis started. Shouldn’t this problem corrected itself many years ago? He has asked this questions many times and most recently framed it this way: Why do we *need* more safe assets? Why don’t we just let the [...]
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Finance & Markets
William Black in Davos: Now We Know Better
Below, find a video of William Black’s speech at the 2013 Public Eye Awards in Davos, Switzerland. Quoting George Ackerlof and Paul Romer, Black references an early warning against deregulation, and 1993 followup that “many economists still seem not to understand that a combination of financial circumstances in the 1980s made it easy to loot [...]
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Finance & Markets
CNBC Video Clip: FX Outlook
Here is a video clip of my (short) appearance on CNBC’s Squawk Box on January 25 where I discussed the currency outlook. “I seems to me that the correlation between the euro, say, and the yen and the U.S. stock market has really become decoupled. I think there’s three drivers really todya in the FX market: one [...]
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Ed Dolan's Econ Blog
Debt Sustainability, Growth, Interest Rates, and Inflation: Some Charts for Discussion and Some Inconvenient Truths for MMT
In a series of posts[1] [2] [3] [4] [5] over the last couple of months, fellow Economonitor blogger L. Randall Wray and I have been exploring the conditions under which the government’s debt can be said to be sustainable. Wray writes from the point of view of Modern Monetary Theory (MMT), while I adopt a [...]
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Finance & Markets
SEC Bans Wrong Ratings Agency
Throw back the little ones And pan fry the big ones Use tact, poise and reason And gently squeeze them -Steely Dan, Throw back the Little Ones The WSJ is reporting that the Securities and Exchange Commission has suspended small ratings firm Egan-Jones from issuing any “official ratings” on bonds issued by countries, U.S. states, or [...]
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Great Leap Forward
MMT AND THE SUSTAINABILITY OF SOVEREIGN DEFICITS AND DEBT
This is the fourth part of the series on sovereign deficits and debt. (Last week I erred in identifying the post as the third part in the series on math sustainability—it was the third part of the whole series but only the second piece on math sustainability; in a sense, this is the third part [...]
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Finance & Markets
The Waldman-Krugman-Sumner Debate: It’s the IOER Path
Are we headed toward a brave new world of perpetual liquidity traps? Steven Randy Waldman says yes. He believes the Fed will continue operating in a zero lower bound-like environment going forward, even after the economy has recovered and interest rates return to more normal levels: What I am fairly sure won’t happen, even if interest rates [...]
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Finance & Markets
Deep Dive: Financial Repression Reconsidered
In response to the end of the credit cycle, policy makers and central bankers in the high income countries have exponentially increased their presence in the capital markets. Debt issued by governments has soared and central banks are pursuing unorthodox policies—the purpose of which varies from country to country. The purpose of quantitative easing in the [...]
