Archives: March 2008

Why the Paulson Plan is DOA

Posted by: Michael Mandel on March 30, Categories: Financial markets

Let’s see. In the middle of perhaps the greatest financial upheaval since the Great Depression, Treasury Secretary Hank Paulson is proposing a change in financial regulations which basically amounts to...

Did the recession begin in November?

Posted by: Michael Mandel on March 29, Categories: Macro

Let me summarize quickly. On the surface, the personal consumption report released by the government on Friday shows that real PCE is still at an all-time peak. In fact, a...

More on debt and net worth

Posted by: Michael Mandel on March 20, Categories: Financial markets

By request, here are two charts. The first chart is the ratio of household debt to GDP, starting with the end of 1959. You can see that the post-2000 jump...

The World's Scariest Chart

Posted by: Michael Mandel on March 19, Categories: Financial markets

This chart, which plots the ratio of U.S. household debt to GDP, gets my vote for the scariest chart. This chart shows something surprising...an enormous acceleration of borrowing starting in...

A Global Bailout?

Posted by: Michael Mandel on March 17, Categories: Financial markets

We now have to think the unthinkable: What if the combined resources of the Federal Reserve and the U.S.. government are not enough to prop up the financial markets? What...

The Fed Throws the Kitchen Sink

Posted by: Michael Mandel on March 16, Categories: Financial markets

Imagine my surprise today (Sunday) when I went to the Federal Reserve site to pick up some industrial production data for my textbook. Instead, I found an emergency press release...

The test of Rational exuberance

Posted by: Michael Mandel on March 14, Categories: Financial markets

In 2004 I wrote a book called Rational Exuberance. The main premise of the book was that the boom-bust pattern of the U.S. economy was actually an advantage. Back then...

Lags in Monetary Policy with the TSFL

Posted by: Michael Mandel on March 11, Categories: The Fed

We all know that monetary policy takes 12-18 months to have its full effect on the economy. So the first rate cut of 50 basis points in September 2007 is...

The War of Financial Innovation

Posted by: Michael Mandel on March 11, Categories: The Fed

Call this the war of financial innovation. This credit crunch came about, in part, because of the misuse of new financial instruments. Now Fed Chairman Ben Bernanke is responding with...

Now we are getting serious

Posted by: Michael Mandel on March 11, Categories: The Fed

The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion...

Mark to Market and the Equity Premium

Posted by: Michael Mandel on March 10, Categories: Financial markets

Call this the dept. of unanticipated consequences. Regulators have encouraged financial institutions to adopt 'mark-to-market' accounting, in the interest of greater transparency. And that's partly why we've seen such big...

Healthcare jobs

Posted by: Michael Mandel on March 07, Categories: Labor Market

Today's job report shows that healthcare continues to generate jobs, Now that we've presumably headed into a recession, we can calculate peak-to-peak job growth. According to my calculations, health care...

The credit crunch and unemployment benefits

Posted by: Michael Mandel on March 05, Categories: Labor Market

Alan Krueger of Princeton is testifying today before the Senate Health, Education, Labor and Pensions Committee. Here's an interesting point he makes in his testimony: ....it seems to me...

A wish list for economic statistics?

Posted by: Michael Mandel on March 05, Categories: Macro

Here's the question. If you were an economic policymaker, what is the one (or two) economic statistics that you would like to have, that you don't have right now? Or...