James Hamilton, at Econbrowser, notes that he’s surprised by the 0.75% increase in average house prices (as measured by the S&P/Case-Shiller Index of twenty cities). He also says he’s skeptical because of the backlog of unsold homes, likely increases in foreclosures, and high, rising unemployment, especially since Calculated Risk is, too.
Zombie bankss
Check out this entry from Calculated Risk if you’d like a shot of cold, hard reality about the value of the happy Stress Test predictions. So far, unemployment is exceeding the “more adverse” stress test scenario and already higher than the peak unemployment rate in the baseline scenario. That rough beast slouching towards Bethlehem not to be born, but to die, is Bank of America.
Calculated Risk: Employment Report: 539K Jobs Lost, 8.9% Unemployment Rate
Congressional Budget Office Director Douglas W. Elmendorf summarizes his testimony to Congress (there’s also a link to the pdf file of the full testimony). Unfortunately, the simplest way to ‘distribute the value of carbon allowances,’ to paraphrase Elmendorf, is not mentioned: dividing it up equally. The technical details (division!) have been dealt with before on this blog by Jonathan. Why would this obvious alternative be left out? My inner conspiracy theorist whispers that it’s left out to make [...] read more >
Steve Matthews and Michael McKee at Bloomberg seem to think so. But a simple idea occurs to me: if the Fed is really worried that banks will cause inflation by drawing down reserves, can’t the Fed just raise the required reserve ratio (that’s the percentage of a bank’s deposits [your checking account, for example] that it is required to keep in it’s reserve account at the Fed)? This seems too simple. Am I missing something or are Bloomberg’s reporters?
In “A flawed first draft of history“, FT editor Lionel Barber gets history wrong (again). He claims the origins of the financial crisis were too hard to spot even for financial reporters, because they were to be found “in the credit markets, coverage of which in most news organizations counted as a backwater.” All those derivatives and such were the root of the problem. Actually, as some read more >
UPDATE, below
The part of the new bailout bill that’s supposed to bring along the most formerly reluctant House members is to raise the coverage limit for Federal Deposit Insurance Corporation (FDIC) insured personal deposits (which includes savings and checking accounts, cds and money market accounts) from the current level of $100,000 to $250,000. Obama, McCain and the FDIC all approve. See this story, for instance. But who does this really affect? Using data from the 2004 Survey of Consumer [...] read more >
I don’t often agree with Greg Mankiw, but in this case I do agree with two of his points, if not with his reasoning.
As discouraging as votes on things like FISA and telecom immunity have been, there are still some enormous differences between the two (?) major party candidates. For example, there’s the distributional impacts of their tax policy proposals, as well-illustrated in the figure below from the Tax Policy Center’s newly updated analysis (click on image to embiggen).
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Just when you thought there would never be any good news about the economy, oil, or anything along comes this. McClatchey reports that a new report commissioned by Ted (“the internet is a series of tubes“) Stevens (R, Alaska) finds that drilling the Arctic National Wildlife Refuge in Alaska would, in ten years, bring the price of a barrel of oil down by $0.75. Wow. At today’s prices ($135 per barrel and [...] read more >
J.S. at Environmental Economics seems to think so. Maybe. According to a NY Times piece the bill
would revoke $17 billion in tax breaks extended to big oil companies like Exxon Mobil Corp and slap a 25 percent windfall profits tax on firms that don’t invest in new energy sources.
My question is: will the Democrats grow a spine in time to pass such a bill, even in the face of some opposition?
