Rolf Englund IntCom internetional
Skuldfrågan/ Who is responsible?
Innan ett kreditinstitut beslutar att bevilja en kredit skall det pröva risken
för att de förpliktelser som följer av kreditavtalet inte kan fullgöras.
Institutet får bevilja en kredit bara om förpliktelserna på goda grunder kan förväntas bli fullgjorda.
Banklagen 8 kap. 1 §
To what extent was the economics profession to blame for the financial crisis?
Many would agree with Paul Volcker, former chairman of the US Federal Reserve, when he pointed in The New York Review of Books in 2011 to “an unjustified faith in rational expectations, market efficiencies and the techniques of modern finance”.
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It needs to be clearly and widely understood that
The negative-publicity campaign against King, years in the making but seriously escalated last week, is being staged by the same "vested interests" which he, almost alone among Western central bankers, has dared to face-down. As such, the investment banks drip their poison, the PR agencies punt it and knocking-copy sells papers – not least when times are tough.
The Governor is determined to do everything he can, before his term expires in June 2013, to rein-in UK banks. The City doesn't want that, of course. So history is being re-written, with King being accused of all manner of things in order to undermine his authority.
Sir Mervyn King has said - in a rare admission
"With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called 'light-touch' regulation hadn't prevented any of this ...
Remove the punch bowl
The risk of slowing growth, or even a mild recession, would have been preferable to the disaster that befell us. Raising rates would have sent a very obvious signal and would have removed the punch bowl from an already rowdy party.
Sir Mervyn is keen on the punch bowl cliche to describe how the Bank will act in future, but he's failed here before.
The boom and bust of Mervyn King
I had heard all of that before, in his speeches, evidence to the Treasury Select Committee and briefings, as a recurring theme since the banking and finance debacle of four years ago that has hobbled our economy.
In a way, I underestimated the power of the BBC's Today programme, in that it provides a megaphone that turns almost anything he (or perhaps anyone) says into news.
His phrase that seems to have caught much of the media's imagination was: "We should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so called 'light-touch' regulation hadn't prevented any of this."
Sir Mervyn put it this way: "Whether in this country, the United States, or Europe, there was no unsustainable boom like that seen in the 1980s; this was a bust without a boom".
How Sir Mervyn King has rewritten history
In his version of events, had the Bank been in charge of financial regulation, Britain would not be where it is today. It was powerless, though, because Gordon Brown had stripped it of every tool bar the megaphone.
En del bedömare /däribland Lars Jonung/ tror att Greenspan i USA
Den stabiliseringspolitiska diskussionen kompliceras av att många inte kan hålla isär de långsiktiga frågorna från vad som borde göras om man redan råkat ut för en konjunkturnedgång, speciellt om den också utlöst en finanskris.
Ett exempel på detta är de motstridiga synpunkter som kommer på den amerikanska återhämtningen, som nu går oväntat knackigt.
RE: Kapitalet från Kina anges som en förklaring till det som brukade kallas "Conundrum"
- The conundrum has deepened. It has become the central mystery of today's economy, Allan Murray Wall Street Journal 1/6 2005
38 olika förklaringar till krisen
Med början 2007 gled den amerikanska ekonomin ned i den mest allvarliga krisen sedan 1930-talets depression: vem eller vad vållade krisen?
Kommissionen resonerar som om den amerikanska krisen skulle vara unik – utan föregångare. Så är inte fallet. Den följer det traditionella mönstret för finanskriser.
Först kommer en period med alltför snabb ökning i kreditvolymen i förhållande till tillväxten i samhällsekonomin. Priset på olika tillgångar som hus och aktier pressas upp till ohållbara nivåer.
Förr eller senare hejdas expansionen. Kraschen blir ett faktum.
Greenspans politik var nödvändig och tillräcklig för finanskraschen.
De övriga krisförklaringarna förutsätter nämligen att penningpolitiken är starkt expansiv under lång tid. Tillsammans med Feds politik blev de till slut delar av en explosiv cocktail.
Greenspan - en gång ”maestron”– framstår i dag som en misslyckad centralbankschef som alltför länge berusade sitt land med billiga krediter.
Nationalekonomi i kris.
"Nu har jag försökt göra mig till ovän med så många grupper av ekonomer som möjligt. Jag tror att jag har fått med de flesta: andra makroekonomer, finansiella ekonomer, ekonomhistoriker, centralbanksekonomer, ekonometriker plus alla andra som inte vill prata om samma saker som jag själv på kafferasterna. Jag har även varit lite kritisk mot mig själv."
Kollegorna i panelen tittade på honom. Kollegorna i publiken tittade på honom.
Vad var det Lars Calmfors, den svenska nationalekonomins enda fixstjärna, just hade sagt?
Nationalekonomiska föreningen i januari 2010
2003 kunde nobelpristagaren och en av de mest betydelsefulla nationalekonomerna genom tiderna, Robert Lucas, som kallats »The Keynes Killer«, i ett tal hos amerikanska ekonomföreningen, stolt deklarera:
I ett kvarts sekel såg ekonomerna ut att ha det mesta under kontroll. Men det fanns ett stort problem, vilket skulle visa sig med all kraft hösten 2008. Modellerna – så kallade DSGE-modeller – som de bräckta ekonomerna arbetade med, oavsett vilken skola de i grunden tillhörde, saknade i nästan samtliga fall en sak.
Enligt teorierna om jämvikt kunde ju inte finansmarknaden hamna i kris, och skulle den mot förmodan hamna i kris skulle den inte dra med sig resten av ekonomin.
Dagen då Lehman Brothers föll blev därför också dagen då den nationalekonomiska makroteorin föll från sin piedestal. Eller som domen från den kanske mest kända nationalekonomen av dem alla i dag, den amerikanska nobelpristagaren Paul Krugman, lyder:
– Det mesta av de senaste trettio årens arbete inom makroekonomi har som bäst varit uppseendeväckande värdelöst, och som sämst direkt skadligt.
Lars Pålsson Syll är en »one man show« – som han själv beskriver det – inom svensk nationalekonomi. Om rådande nationalekonomin säger han:
Lars Pålsson Sylls kamp mot allt vad rationella förväntningar och effektiva marknader heter var länge tröstlös. Liksom hans försök att få kåren att börja läsa Keynes klassiker och inte bara urvattnade nykeynesianer. Så kom den ekonomiska krisen, som i Lars Pålsson Sylls ögon gav honom rätt. Men nej, inte började man lyssna på honom för det.
På samma tema har Vetenskapsradion diskuterat 16 mars 2010 (Tson Söderström och de Vylder).
Men vare sig man är makroekonom av lucasianskt eller keynesianskt snitt borde man ha haft ögon att se med. År 2007 hade det uppdrivna bostadsbyggandet i USA oavbrutet, kvartal för kvartal, i två år fallit motsvarande 2,5 procent av BNP.
Flytande krona mer stabil än euron
Although there have been recessions ever since the beginnings of the industrial economy, the natural state of the modern world is for demand to grow roughly in line with potential output, thus producing sustained economic growth.
Indeed, precisely because of this, for two centuries, economists were unaware of the problem of chronically deficient aggregate demand and they developed economics pretty much without any reference to it. Until Keynes.
Confronting the painful reality of depression conditions in the 1930s, he explained how this happened, why it might persist and what needed to be done to overcome it.Full text
The reputation of economists, never high, has been a casualty of the global crisis.
Economic systems are typically dynamic and non-linear.
A vocal minority who have responded cynically to the insatiable public demand for forecasts. Mostly they are employed in the financial sector – for their entertainment value rather than their advice.
Even if sharp predictions of individual economic outcomes are rarely possible, it should be possible to describe the general character of economic events, the ways in which these events are likely to develop, the broad nature of policy options and their consequences.
The reckless masters of "economic armageddon"?
There have been many books written about the financial crisis: What caused it, who’s to blame and how it could have – and should have – been prevented
This new one, “Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon,” lives up to its lengthy title and gets deep into the weeds of who did what, when and how.
In short, Gretchen Morgenson and Joshua Rosner name names and connect the dots.
CNN 27 May 2011 with nice pic
Singled out for particular criticism, James Johnson, former CEO of Fannie Mae
The only certain is this: It could all easily happen again.
Reckless Endangerment at Amazon
"I wrote the software that turned mortgages into bonds"
In the depths of the financial crisis, many analysts pointed to the role of economics in causing the debacle.
25 People to Blame for the Financial Crisis
A Senate panel issued a scathing report that describes
The 600-page report also blames the lending practices of big commercial banks, such as the now-defunct Washington Mutual, for plunging the U.S. economy into a painful recession.
It is a question asked repeatedly across America:
Answering such a question — the equivalent of determining why a dog did not bark — is anything but simple. But a private meeting in mid-October 2008 between Timothy F. Geithner, then-president of the Federal Reserve Bank of New York, and Andrew M. Cuomo, New York’s attorney general at the time, illustrates the complexities of pursuing legal cases in a time of panic.
The unpopularity of very low interest rates leads to what is known in financial circles as “the search for yield”.
It is this that lies behind the banking scandals, the epidemic of frauds and, on a lesser level,
the public toleration for bankers’ refusal to pass on to their customers the very low “policy interest rates” established by central bankers
Samuel Brittan, FT March 31 2011
From preface of Laurence J. Kotlikoff, Jimmy Stewart is dead.
From preface of Laurence J. Kotlikoff, Jimmy Stewart is dead.
We economists are charged with understanding and protecting the economy; we´re supposed to spot economic disasters before arise and recommend solutions. Unfortunately, we failed in our fiduciary duty.
With rare exceptions, those of us manning the watch - the economists hired by the government and the business world - missed what was coming, were shocked when it happened, exacerbated the public´s fear, and are now helping resurrect the system that failed so miserably.
The rest of us - academic economists like myself - were perched in ivory towers, too high above the deck to see the pervasive financial malfeasance that was underway. We had a clear view had we looked, but we were researching our imaginary world in which people play by the rules. Consequently, we had even less clue that the nation´s largest financial companies, aided and abetted by the rating companies, politicians and regulators, were madly driving our economy straight toward the rocks.
They reached their destinati on. The economy is now firmly on the shoals and in ongoing danger of completely breaking up.
Given that our economy is in DEFCOM 1 or very close to that condition, it´s all economic hands on deck. Every economist has an obligation, regardless of her or his specialization, to focus on this economic emergency - to understand what really went wrong and to help make sure this never, ever happens again.
It's a Wonderful Life is a 1946 American drama film with James Stewart
How Goldman Killed A.I.G.
According to Bethany McLean and Joe Nocera, two of America's most acclaimed business journalists, no-one has put all the pieces of the financial crisis together.
The International Monetary Fund badly missed the risks that led to the global financial crisis
A sharply critical report from the fund’s independent evaluation office, published on Wednesday, said that the IMF was very late to spot the severe interconnected problems in the world’s advanced economies.
As late as the summer of 2008, the IMF’s management was confident that “the US has avoided a hard landing” and “the worst news are [sic] behind us”, the report said.Full text
"Det är svårt att vara olyckskorp när allt går som smort"
Gordon Brown told a US conference he had not realised the "entanglements" of global institutions
He said: "We set up the FSA [the City regulator] believing the problem would come from the failure of an individual institution. That was the big mistake.
Mr Brown said he had to "accept my responsibility" but added he was not the only one who had made mistakes.
The most interesting moment at a recent conference held in Bretton Woods economic came when Martin Wolf quizzed Larry Summers
Summers then enlarged his answer to include living economists: “Eichengreen, Akerlof, Shiller, many, many others.” He talked about “the revolution in finance as it was realized that asset prices show large volatility that does not reflect anything about fundamentals,” but added that
The Sorrow and the Pity of Another Liquidity Trap
As a profession we have failed miserably at our primary function – the efficient and productive allocation of capital: The S&L debacle of the early 1980s, the Asian crisis, LTCM, dotcoms, subprimes, Lehman and the resurrection, instead of the reformation, of Wall Street, are major sins of the modern era of money.
Hang your heads, moneychangers. And no, it is not yet time to move on, as many banking CEOs suggest. How can bond traders make ten, one hundred, one thousand times more money than an engineer or social worker given their dismal historical performance?
Central bankers have lowered the cost of money for 30 years now, legitimately following global disinflationary forces downward, but also validating increased leverage via lower real interest rates.
Today’s rock-bottom yields, however, have less to do with disinflation and more to do with providing fuel for an asset-based economy that promotes unsustainable wealth creation and a false confidence in perpetual capital gains.
The Black-Scholes equation was the mathematical justification
The equation itself wasn't the real problem. It was useful, it was precise, and its limitations were clearly stated. It provided an industry-standard method to assess the likely value of a financial derivative. So derivatives could be traded before they matured. The formula was fine if you used it sensibly and abandoned it when market conditions weren't appropriate. The trouble was its potential for abuse. It allowed derivatives to become commodities that could be traded in their own right. The financial sector called it the Midas Formula and saw it as a recipe for making everything turn to gold. But the markets forgot how the story of King Midas ended.
“Economics is a science of fashions – Keynes and ‘pump-priming’ at one time, Friedman and monetarism at another,”
“The profession burns through new theories the way a teenager hops from one new date to another:
Eugene Fama, developer of the efficient market hypothesis, was one of his students, but Mandelbrot grew less impressed with such theories as years went on. The capital asset pricing model developed by several analysts in the 1960s, Harry Markowitz’s modern portfolio theory, the Black-Scholes equation for pricing options – all of these came in for Mandelbrot’s scorn
This item from June 11, 2007
The conclusion that most economists are naive, sometimes dangerously so, is something that has been hinted around at here for years, but now that the Wall Street Journal seems to concur, maybe it’s time to stop asking the question and just say it.
Most economists are naive.
Rädsla och girighet blev HQ:s fall
HQ Banks fall tydliggör också två av skälen till varför vi hamnade i finanskrisen – att myndigheternas tillsyn är för snäll och att revisorer ofta ser mellan fingrarna.
Redan 2007 skrevs det mycket om HQ Banks affärer, året efter fick man en varning av Finansinspektionen.
HQ:s revisor synas
Or maybe it’s become just too obvious that we created the financial crisis.
- Krisen orsakades av en global finansiell krasch där giriga spekulanter tog orimliga risker,
As the third anniversary of the credit crunch approaches, I have been doing some reflecting on where I went wrong as an economist.
Many elements of the crisis were provoked not by irrational behaviour but by rational responses to perverse incentives. Too many people were able to take the following bet: “Heads I win, tails the financial system loses.”
True, the crisis has provided yet another feather in the cap of the behavioural economist Robert Shiller.
The crisis provided just as much vindication for Raghuram Rajan, an eminent but perfectly orthodox Chicago-school economist, who in 2005 pointed to elevated house prices
Similarly, my colleague Gillian Tett made headway because she asked simple but probing questions: Where had all these derivatives come from?
what I got so wrong: I thought that the details did not much matter. Derivatives sounded like a sensible idea in principle and that was all I needed to know.
I sometimes joke that although I didn’t know anything about banking when the credit crunch began, at least the people running the banks didn’t know anything about banking either. The joke always gets a laugh. I wonder if it is really that funny.
Claremont Review of Books Spring 2010
Books mentioned in this essay:
This Time Is Different: Eight Centuries of Financial Folly, by Carmen M. Reinhart and Kenneth S. Rogoff
The great lesson of the past year is how little we understand and can control the economy.
In 1984, I bought my London house. I estimate that the land on which it sits was worth £100,000 in today’s prices. Today, the value is perhaps ten times as great.
Sverige, Estland och Luxemburg
Det är en historiskt kraftig kris vi upplevt. Vi vet var den hade sina rötter. Den grodde i en jordmån av global makroekonomisk obalans, nya komplexa värdepapper, otillräckliga regleringar, bristande tillsyn av finansmarknaderna samt girighet och ansvarslöshet hos aktörer som ständigt gapade efter mer.
I återgången till hållbara offentliga finanser är implementeringen av stabilitets- och tillväxtpakten avgörande.
I dag kommer vi att fatta beslut om att inleda underskottsförfarande för Finland, Danmark, Bulgarien och Cypern. Därmed kommer det bara att vara 3 av 27 länder som inte är föremål för underskottsförfarande (Sverige, Estland och Luxemburg).Estland - Stabilitetspakten - Anders Borg
"Den ekonomiska krisen har slagit sönder många länders offentliga finanser"
En vanlig uppfattning inom ekonomisk forskning är att bubblor är svåra, eller omöjliga, att peka ut innan de brister.
Morgan Stanley’s former Asia chief Stephen Roach:
Member countries share a common currency, but when it comes to sovereign credit they are on their own.
For instance, European banks hold nearly a trillion euros of Spanish debt, of which half is held by German and French banks. It can be seen that the European sovereign debt crisis is intricately interconnected with a European bank crisis.
The Fund is guaranteed not jointly but only severally, so that the weaker countries will in fact be guaranteeing a portion of their own debt. The Fund will be raised by selling bonds to the market and charging a fee on top. It is difficult to see how these bonds will merit an AAA-rating.
The European Union was built by a process of piecemeal social engineering: indeed it is probably the most successful feat of social engineering in history. The architects recognized that perfection is unattainable. They set limited objectives and firm deadlines. They mobilized the political will for a small step forward, knowing full well that when it was accomplished its inadequacy would become apparent and require further steps. That is how the six-nation Coal and Steel Community was gradually developed into the European Union, step by step.
RE: See Jean Monnet
The Maastricht Treaty contained a clause that expressly prohibited bailouts and that ban has been reaffirmed by the German constitutional court. It is this clause that has made the current situation so difficult to deal with.
RE: Read more here
Now that several countries are far away from the Maastricht criteria, there is neither an adjustment mechanism nor an exit mechanism. Now these countries are expected to return to the Maastricht criteria even if such a move sets in motion a deflationary spiral. This is in direct conflict with the lessons learned from the Great Depression of the 1930s, and is liable to push Europe into a period of prolonged stagnation or worse. That will, in turn, generate discontent and social unrest. It is difficult to predict how the anger and frustration will express itself.
When all the member countries try to be like Germany they are bound to send the eurozone into a deflationary spiral.
So what should Germany do? It needs to recognize three guiding principles.
First, the current crisis is more a banking crisis than a fiscal one. The continental European banking system was never properly cleansed after the crash of 2008. Bad assets have not been marked-to-market—i.e., valued according to current market price— but are being held to maturity.
Second, a tightening of fiscal policy must be offset by a loosening of monetary policy. Specifically, the ECB could buy Spanish treasury bills,
Third, this is the time to put idle resources to work by investing in education and infrastructure.
Supporting Merkel’s approach, the G-20 endorsed a halving of budget deficits by 2013 as the target. This has extended the threat of a deflationary spiral to the global economy, making the experience of the 1930s even more relevant than it was when I gave much of the preceding text as a speech at Humboldt University.
The euro was meant to be a monetary union but not a political one.
The construction is patently flawed. A fully fledged currency requires both a central bank and a Treasury.
The Treasury need not be used to tax citizens on an everyday basis but it needs to be available in times of crisis. When the financial system is in danger of collapsing, the central bank can provide liquidity, but only a Treasury can deal with problems of solvency. This is a well-known fact that should have been clear to everyone involved in the creation of the euro.
It was the banks and other financial institutions (e.g. pension funds, insurance companies) that facilitated the boom at the periphery of the eurozone by lending huge sums to Spain, Greece, Ireland and Portugal under virtually the same conditions as those applicable to Germany and the Netherlands.
Bra film av Johan Norberg om finanskrisen, men utan svar
Dagens globala finanskris har utlöst en kris för ämnet nationalekonomi.
Everyone has a theory about the financial crisis.
Everyone has a theory about the financial crisis. These theories range from the absurd to the plausible — from claims that liberal Democrats somehow forced banks to lend to the undeserving poor (even though Republicans controlled Congress) to the belief that exotic financial instruments fostered confusion and fraud.
As a new research paper by the Irish economists Gregory Connor, Thomas Flavin and Brian O’Kelly points out, “Almost all the apparent causal factors of the U.S. crisis are missing in the Irish case,” and vice versa.
Yet the shape of Ireland’s crisis was very similar: a huge real estate bubble — prices rose more in Dublin than in Los Angeles or Miami — followed by a severe banking bust that was contained only via an expensive bailout.
Ireland had none of the American right’s favorite villains: there was no Community Reinvestment Act, no Fannie Mae or Freddie Mac. More surprising, perhaps, was the unimportance of exotic finance:
So what did we have in common?
First, there was irrational exuberance:
Second, there was a huge inflow of cheap money.
In America’s case, much of the cheap money came from China; in Ireland’s case, it came mainly from the rest of the euro zone, where Germany became a gigantic capital exporter.
But the most striking similarity between Ireland and America was “regulatory imprudence”: the people charged with keeping banks safe didn’t do their jobs.
By all means, let’s limit both leverage and the use of securitization — which were part of what Canada did right. But such measures won’t matter unless they’re enforced by people who see it as their duty to say no to powerful bankers.
"Det är svårt att vara olyckskorp när allt går som smort"
One fascinating idea now provoking a chorus of behind-the-scenes debate among regulators and central banks
a so-called “bail-in”.
In some respects, this echoes another set of ideas on the table around contingent capital, or “cocos”. This suggests banks should issue bonds that would automatically convert into equity when certain triggers were breached, a long time before the point of potential collapse.
But there is a crucial distinction: the “bail-in” scheme does not use automatic triggers, but instead lets regulators decide when to wipe out creditors, just before the moment of collapse (or “one minute to midnight”, as traders say).Gillian Tett - Too big to fail
How the market can control the banks
Barack Obama has decided to side with a state solution, if not yet a well-thought-out one, to preventing bank failures bringing down the world economy. But there is a market alternative: fix the banks so the bondholders keep bank risk-taking under control - and bear the costs if they fail in that task.
This important debate is not being framed as a state vs market discussion, but it should be.
Remember state control has a dismal record in general, and in the finance sector in particular. Regulators entirely missed the bubble, missed the banks’ reliance on short-term financing and missed the fact that so much regulatory arbitrage was going on.
The problem is the banks (and potentially non-banks) being too big to fail, creating perverse incentives to take risks and leaving the taxpayer paying for mistakes.
This can be done, using contingently convertible bonds - “CoCos” - which turn into shares when capital falls below a specified level. The legal documents backing CoCos explicitly lay out these risks, but that would not be enough. What is needed is the regular use of CoCos. I would suggest that banks are forced - yes, I know, regulation - to raise all their debt through CoCos, and to have a ladder of capital ratios at which debt converts.
We need to learn from those countries that evidently did it right. And leading that list is our neighbor to the north. Right now,
The cause of our crises has not gone away
Let the finger-pointing begin.
Some economists have even questioned whether there was a credit crunch. Economic professor René Stulz of Ohio State University, for one, has written papers trying to clear Wall Street pay and credit-default swaps of any blame. Despite recent apologies, Goldman Sachs executives, too, say that they are no more to blame than anyone else in the financial markets.
In simple terms, the prevailing consensus is to view the post-2007 crisis as the result of an external shock which could not have been anticipated.
A series of monetary policy mistakes in the late 1990s meant that interest rates were too low, creating in several countries what Austrian economists such as Friedrich Hayek, called an “inter-temporal” problem. It is no coincidence that economists who did predict the crisis, notably in Britain the estimable Bernard Connolly, looked at economics in a similar way.
In essence what happens is that inappropriately low rates of interest bring forward investment spending by households and business (adding to demand when it takes place) from “tomorrow” to “today” so that when “tomorrow” arrives, budget constraints reduce spending at precisely the time when “yesterday’s” investment comes on stream, adding to supply.
Monetary Policy and the Housing Bubble
What is the use of economics if it cannot answer even such a basic question?
About six months later the cream of the British economics profession responded with a mealy-mouthed letter of self-justification from the British Academy, waffling on about “a failure of the collective imagination” and “the psychology of denial”.
Since then the intellectual confusion has only intensified, as we can see by the inability of professional economists in Britain and America to agree on something as important as whether reductions in government deficits will accelerate or slow growth.
What is the use of economics if it cannot answer even such a basic question?
When the Queen asked asked an academic at the LSE why the economics profession had failed to predict the credit crunch, she raised a topic which continues to resonate.
The latest academic attempt to tackle the question is this piece by Raghuram Rajan. He is well qualified to write on the matter, having delivered a very perceptive warning about a possible crisis to the entire senior cast of global central banking at Jackson Hole in 2005. They politely ignored him. Prof Rajan now argues that economists had all of the models required to understand the credit crisis, but that the subject suffers from being segregated into increasingly narrow fields. It therefore lacks people with the broad overall view necessary to connect all of the diverse strands. This is indeed a problem, but it may not be the whole answer to the Queen’s question.
In fact, the IMF’s watchdog criticised the organisation on exactly those grounds yesterday.
Tetlock systematically collected a vast number of individual forecasts about political and economic events, made by recognised experts over a period of more than 20 years. He showed that these forecasts were not very much better than making predictions by chance, and also that experts performed only slightly better than the average person who was casually informed about the subject in hand.
It is easy to see that the hedgehogs are by far the more likely group to predict a very big disruptive event like the credit crisis. By temperament, they are willing to be continuously wrong for very long periods in order to be right periodically on very big issues. And that did indeed happen to the relatively few economists who predicted the onset of the credit crisis, often many years before it happened.
So one answer to the Queen’s question about why economists failed to predict the crisis could be: “Because economists are rational, ma’am”. But I am not sure she would be terribly impressed.
In 2008, as the global financial crisis unfolded, the reputation of economics as a discipline and economists as useful policy practitioners seemed to be irredeemably sunk,
The writer is senior fellow at the Peterson Institute for International Economics and the Center for Global Development, and senior research professor at Johns Hopkins University
Most crises, notably the big ones, creep up on us from unsuspected quarters. As Keynes wisely observed: “The inevitable never happens. It is the unexpected always.” So, if the value of economics in preventing crises will always be limited (although hopefully not non-existent), perhaps a fairer and more realistic yardstick should be its value as a guide in responding to them. Here, one year on, we can say that economics stands vindicated.
Arvind Subramanian argues that economics has redeemed itself by rescuing the world economy from the crisis. I agree, but only up to a point.
Central bank money printing and the mystery of soaring shares
Bernanke was as clueless as Greenspan about the coming storm.
At Lehman, the top five executives received cash bonuses and proceeds from stock sales
About Richard A. Posner, A Failure of Capitalism: The Crisis of '08 and the Descent into Depression
The headline /Mishkin in FT/ sort of says it all:
“Why did no one see the crisis coming?” Queen Elizabeth asked last year.
Did this reflect, as some claim, that economics has gone astray with models that no longer help understand economic reality but rather distort it? Did such models even contribute to the crisis?
A blogger who left Britain 20 years ago for rural bliss in Spain has become an unlikely economic sage whose advice has been sought by the International Monetary Fund.
Hugh attended the London School of Economics in the late 1960s but says he "wasn't learning a lot" and his interest in the subject waned until Japan's economic woes captured his attention, decades later.
By May, Hugh was speaking at the Círculo de Economía, a respected annual meeting of business minds in Barcelona. And just this week a profile in the New York Times pushed his Facebook page to the limit of 5,000 friends. Around 1,000 people tried to "add him" as a friend in one day.
I put forward this idea is that maybe the simplest and quickest solution is for Germany to go back to the mark," he said.
About Krugmans NYT article “How Did Economists Get It All So Wrong”
First, the academic side of economics fell too much in love with beautiful mathematical models, which created a bias toward assuming perfect markets.
Second, the same forces that lead to financial bubbles – prolonged good news tends to silence the skeptics – also applied to economists. Those who rationalized the way things were going gained credibility until the day things fell apart.
Southern Europe's problem is essentially a competitiveness problem, and not a fiscal one
How Did Economists Get It So Wrong?
Boom, Bust and Blame
Låga räntor och räddningsaktioner för banker och storföretag
Most people wonder how the financial crisis will end. For some, the story of how it began is just as important.
No wonder Wall Street executives are spinning the causes of the crisis, downplaying their roles in inflating the housing and credit bubbles while presenting themselves as integral to any solution.
Forty years ago, the psychiatrist Elizabeth Kübler-Ross identified the five stages of grief following a traumatic event:
Nothing can redress the damage wrought by banks' bad behaviour: their greed and poor judgement severely damaged the economy, and among the mostly blameless victims are those who are living on reduced pensions or have lost their jobs, not to mention future taxpayers who will bear the cost of this folly for years to come.
we, the public, need to feel that banks have been kicked into line and that at least for a period they will be chastened and humble. So far, neither of these conditions has been fulfilled.
Despite their still shaky balance sheets and strained capital, things are going rather well for many banks, considering. This is no surprise: they are always good at rebuilding profitability because, unlike most businesses, they have phenomenal pricing power: we need their services.
Riksbanken har inklusive dagens SEK-auktion med fast ränta lånat ut 303 miljarder kronor
The efficient-markets hypothesis
The Fed did not see the crisis coming
This criticism is clearly correct. The Fed’s failure to foresee the storm, even when it was imminent, represents an indictment of its competence at one of its key tasks: discerning developments likely to lead to systemic financial instability before the instability manifests itself, and taking preventive measures.
The Fed failed utterly in this task, but so did every other regulator, supervisor and government agency or official with even an indirect responsibility for financial stability. Alan Greenspan did not see it coming during the almost 20 years (1987 till 2006) he spent at the Fed; neither did Ben Bernanke, a member of the Board of Governors of the Federal Reserve Systemfrom 2002 to 2005, Chairman of the President’s Council of Economic Advisers from June 2005 to January 2006 and Chairman of the Fed since February 1, 2006. Hank Paulson did not discern any financial crisis clouds on the horizon, either during his many years with Goldman Sachs (1974-2006), or during the first year of his tenure as Treasury Secretary (July 2006 - January 2009). Likewise, Tim Geithner failed to foresee the crisis when he was Under Secretary of the Treasury for International Affairs(1998–2001) under Treasury Secretaries Bob Rubin and Larry Summers or as President of the New York Fed (2003 - 2009). Larry Summers was similarly blinded by the light during his years at the US Treasury (1993 -2001), including his years as Deputy Secretary under Bob Rubin (1995-1999) and his tenure as Treasury Secretary (1999-2001). There was not a Dicky Bird either from Don Kohn or Bill Dudley.
In fairness I should add that no academic scribbler, least of all I, foresaw the full force of what was about to descend upon us. Academics are joined in the ranks of these who failed to foresee the financial cataclysm by gurus, pundits, economic and financial journalists, futurologists, urologists and other practitioners of cleromancy.
Finanskrisen beror på fem olika faktorer.
Det finns anledning att sammanfatta hur finanskrisen i USA började mera konkret.
2. Bostadspolitiken som ville sprida ägandet till mindre bemedlade
3. Obligationshanteringen som dolde riskerna med dåliga bostadslån
4. Ratinginstituten som satte höga betyg även på riskabla produkter
5. Utvecklingen av en skuggbanksektor med lägre krav på reglering
Att huspriserna fördubblades på 10 år sågs också som en trygghet eftersom säkerheten för lånen ökade.
"Vi är själva med om att skapa nästa kris med de nuvarande låga räntorna", varnar Bengt Dennis. Greenspans lågräntepolicypekas återigen ut som syndabock till finanskrisen, bland annat av Lars Jonung DI 2009-07-01
Socialismen har genom finanskrisen och klimathotet fått två gratischanser att visa att den lever och att dess praktik borde vara adekvat att tillämpa mot båda. Men ingenting hörs.
I Dagens Nyheters kulturdel igår 14/6 skriver poeten Göran Greider, chefredaktör för Dala-Demokraten (S), en Essä-artikel om klimatpolitiken utifrån ett radikalt vänsterperspektiv.
Hvad vilja socialdemokraterna nu när socialismen är död?
”När musiken tystnar – en rapport om den globala finanskrisen”.
It is only halfway through November but I think we can already declare the winner of the 2007 Quote of the Year competition.
It seems that hedge funds have been designated for ritual sacrifice, even though they played no more than a cameo role in the genesis of this crisis.
But to the extent that this G20 accord makes it impossible for the "shadow banking" to resurrect itself in the next inevitable cycle of risk appetite, it may prevent another disaster of this kind.
The key phrase is "new rules aimed at avoiding excessive leverage and forcing banks to put more money aside during good times." This is more or less what the authorities agreed after the Depression. Complacency chipped away at the rules as the decades passed. It is the human condition, and we can't change that.
Samtal med Johan Norberg
Ekonomiläroböckerna och finanskrisen
As a shell-shocked world tries to fathom how its economic collapse happened,
As a shell-shocked world tries to fathom how its economic collapse happened, commentators are busily outbidding each other with claims about the exceptional nature of this crisis. But the most astounding fact is how familiar its physiognomy and physiology look compared to past financial crashes.
No one can read the chronicles of those earlier crashes without sensing – with a chill – that history is repeating itself. The story of the modern capitalist economy is a rhythmic repetition of cycles, syncopated by eerily similar crises. These crises, while their details differ, are but variations on the same theme.
Easy money, geared up by leverage, floods the financial system through innovative products.
Until, one day, something triggers a loss of confidence in the continued rise of prices, and the whole leveraged edifice crumbles.
Today’s collapse has followed the same pattern – as outlined on Tuesday in the FT’s series on the future of capitalism.
Easy money came from global macroeconomic imbalances that generated enormous capital inflows into deficit countries.
Those flows helped drive interest rates down and increase access to credit, fuelling a leveraged asset bubble.
Many leaders in the affected countries – in particular the US – knew this:
And yet they did not understand how they had to act to prevent a replay of the past.
Sweden's status as a small, open economy enabled it to undertake the reflationary, sharp, and sudden currency depreciation that helped to return the country to growth.
It would be misleading to claim that Sweden's program for dealing with its banks constituted, by itself, a solution to Sweden's economic and financial crisis.
Shares of Swedish banks rose, on average, by a factor of seven during 1993 as the banking system recovered and Swedish growth turned positive by the third quarter that year.
Rather, the current behavior of currencies relative to each other and relative to gold is being determined by an intensifying search for a safe haven store of value.
Rolf Englund blog 2008-04-12:
I internationella media finns nu mer eller mindre beundrande beskrivningar av den svenska modellen.
Rolf Englund blog 2009-03-11
Greenspan: The Fed Didn't Cause the Housing Bubble
"Between 2002 and 2005, home mortgage rates led U.S. home price change by 11 months.
US Federal Reserve chief Ben Bernanke says the world is suffering
Implicitly, the UK government is guaranteeing the liabilities of the swollen UK banks.
I am no populist.
"As president Ronald Reagan’s secretary of the Treasury, I abhor the idea of government ownership. Unfortunately, we may have no choice.
Det är Kontantinsatsen, Stupid!
Hur kunde det gå så snett?
The statement that systemic breakdowns are surprisingly rare
Anders Borg, du har fel
Styrelseordförandena i Davos, inklusive Investors Jacob Wallenberg, inser att de måste bättra sig
Starka incitament och bra bonus är nödvändigt för att anställda ska orka lyfta sina företag ur krisen.
As far as I can see, many bankers still don't get it.
Yet quite a number of them still aren't saying, as the rest of us are, "Golly, I hope I won't lose my job" – or even "Lucky me, I can always sell my house in the Cotswolds, if things get tough."Instead, they are moaning that their bonuses are being cut in half (at Goldman Sachs and Deutsche Bank, for example).
Many bankers still don't seem to grasp that they earned multi-million pound packages as a result of a bizarre twist in the way their industry works, rather than because this is an accurate reflection of their economic productivity. It also turns out that bonuses were paid on the basis of artificially inflated returns.
SEB:s vd Annika Falkengren avstår från sin bonus för 2008.
Falkengren avstår - men låter cheferna dela på 2 miljarder.
Kommentar av Rolf Englund:
En bonusdriven finansbransch har sålt stora mängder obskyra värdepapper
Nu gör han en pudel igen
The crisis triggered by September's bankruptcy of Lehman Brothers appears to have discredited
It's the end of an era. We know that 2008, much like 1932 or 1980, marks a dividing line for the American economy and society. But what lies on the other side is hazy at best.
Secular gods visibly fail: in 1989, communism collapsed;
The god of financial markets has feet of clay.
Good question, Ma'am
"If these things were so large, how come everyone missed them?"
Alan Beattie, Financial Times, November 14 2008
As Daniel Defoe observed after the first British stock market crash of 1696:
Anyone might have foreseen that . . . the raising of stock, of all sorts to a value above the Intrinsick, must have some fatal issue,
and would fall somewhere at last so heavy as to be felt by the whole body of Trade.
Edward Chancellor, author of "Devil Take the Hindmost: A History of Financial Speculation"
Wall Street Journal, August 18, 1999
So angry is Main Street, you could club an investment banker like a seal pup
and stand a reasonable chance of being cheered by judge and jury.
Jeff Randall, Daily Telegraph, 7 Nov 2008
"I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown,"
President George W. Bush, 14 Nov 2008
“Amazing” that the Irish government has “socialized” the banks
During that period, Lewis said, Merrill Lynch received hefty fees to underwrite bonds by some Irish banks. When a Merrill Lynch employee in London characterized some Irish bankers as “irresponsible,” said Lewis, the firm fired him.
The End of the Financial World as We Know It
Michael Lewis, a contributing editor at Vanity Fair and the author of “Liar’s Poker,” is writing a book about the collapse of Wall Street.
Incredibly, intelligent people the world over remain willing to lend us /US/ money and even listen to our advice;
We have at least a brief chance to cure ourselves. But first we need to ask: of what?
What’s interesting about the Madoff scandal, in retrospect, is how little interest anyone inside the financial system had in exposing it. It wasn’t just Harry Markopolos who smelled a rat. As Mr. Markopolos explained in his letter, Goldman Sachs was refusing to do business with Mr. Madoff
Richard Fuld, the former chief executive of Lehman Brothers, E. Stanley O’Neal, the former chief executive of Merrill Lynch, and Charles O. Prince III, Citigroup’s chief executive, may have paid themselves humongous sums of money at the end of each year, as a result of the bond market bonanza. But if any one of them had set himself up as a whistleblower — had stood up and said “this business is irresponsible and we are not going to participate in it” — he would probably have been fired. Not immediately, perhaps. But a few quarters of earnings that lagged behind those of every other Wall Street firm would invite outrage from subordinates, who would flee for other, less responsible firms, and from shareholders, who would call for his resignation. Eventually he’d be replaced by someone willing to make money from the credit bubble.
OUR financial catastrophe, like Bernard Madoff’s pyramid scheme, required all sorts of important, plugged-in people to sacrifice our collective long-term interests for short-term gain. The pressure to do this in today’s financial markets is immense. Obviously the greater the market pressure to excel in the short term, the greater the need for pressure from outside the market to consider the longer term. But that’s the problem: there is no longer any serious pressure from outside the market. The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest.
Over the last 20 years American financial institutions have taken on more and more risk, with the blessing of regulators, with hardly a word from the rating agencies, which, incidentally, are paid by the issuers of the bonds they rate. Seldom if ever did Moody’s or Standard & Poor’s say, “If you put one more risky asset on your balance sheet, you will face a serious downgrade.”
What Went Wrong -- Forces Lined Up Against Bailout
Vad var det då som bröt den goda utvecklingen och ledde till den finansiella krisen?
Efter Lehman Brothers konkursansökan i mitten av september ströps kreditflödena. Ingen hade väntat sig att en så betydande bank kunde fallera och oron steg för att fler aktörer skulle hamna i en liknande situation. Utlåningen mellan världens banker upphörde nästan helt.
När bankerna inte kunde låna mer än på mycket korta löptider, ofta bara någon vecka, ställde Riksbanken upp och lånade ut på längre löptider. Utlåningen har skett både i kronor och dollar. Riksbanken har även inrättat en tillfällig kreditfacilitet för att förbättra de svenska företagens möjligheter att låna pengar av bankerna. För att säkerställa den finansiella stabiliteten har Riksbanken också gett individuellt likviditetsstöd till Kaupthing Sverige AB och Carnegie Investment Bank AB.
En del av arbetet har också rört utlåning till Island och Lettland.
En särskild osäkerhetsfaktor för den svenska finansiella marknaden är utvecklingen i Baltikum där svenska banker har betydande verksamhet och en omfattande utlåning.
Svenska banker står väl rustade med en i utgångsläget god intjäningskapacitet och låga kreditförluster.
How to prevent the Great Depression of 2009
Prof Roger E. A. Farmer is vice chair for graduate studies in the department of economics at the University of California Los Angeles and
Classical economists argue that falling wages will restore equilibrium; but this is based on the belief that the labour market works like an auction in which employment is determined by demand and supply. It ignores the very real frictions involved in searching for a job by both households and firms that can lead to many possible equilibrium employment levels just as Keynes argued in the General Theory.
Although the free market is very good at deciding how many left and right shoes to produce, it cannot prevent systemic risk that arises from the psychology of herd behaviour.
One might not expect much from economists, but one would surely expect them to warn us of a crisis on this scale.
The Fed did not see the crisis coming
They Knew What They Were Selling
"On November 3, 2007, I sent an email to Mr. Robert Rubin and three other members of Corporate Management... In this email I outlined the business practices that I had witnessed and attempted to address. I specifically warned about the extreme risks that existed within the Consumer Lending Group. And I warned that there were 'resulting significant but possibly unrecognized financial losses existing within Citigroup.'" And now taxpayers own 75% of Citi, and our losses to them are huge.
On March 14, 2008, Robert Rubin spoke at a session at the Brookings Institution in Washington, stating that "few, if any people anticipated the sort of meltdown that we are seeing in the credit markets at present”.
Rubin is a former US Treasury Secretary, member of the top management team at Citigroup bank and one of the top Democratic Party policy advisers.
This has been a common view from the very beginning of the credit crisis, shared from the upper echelons of the global financial and policy hierarchy and in academia to the general public.
It is not difficult to find predictions of a credit or debt crisis in the months and years leading up to it, and of the grave impact on the economy this would have - not only by pundits and bloggers, but by serious analysts from the world of academia, policy institutes, think tanks and finance.Full text
Watching Chuck Prince and Robert Rubin, the former Citigroup chairmen, giving evidence today on the bank’s losses in “super-senior” sub-prime mortgage securities, was not reassuring for anyone seeking lessons from the 2008 financial crisis.
Apart from this, the most notable aspect of the hearing so far has been how Mr Rubin has stuck to his view (criticised by me in this earlier column) that he wasn’t an executive at Citi and was not directly responsible for what happened.
Robert Rubin, a senior adviser to Citigroup at the time of its deep losses from subprime mortgages,
Rubin said: "I do not recall knowing before September 2007" that the bank had held onto the investments composed of repackaged mortgage bonds. In November 2007, Citigroup publicly estimated it would lose $8 billion to $11 billion in the fourth quarter that year from those securities.
Rubin, a former Treasury secretary, made the statements in testimony to a panel investigating the roots of the financial crisis. He and other former Citigroup executives have been sharply criticized for allowing heavy investments in high-risk securities. Citi was a major subprime lender.
Critics have said Rubin, with his vast experience on Wall Street and as Treasury chief in the Clinton administration, should have picked up on the warning signs of the crisis and taken a more active role in preventing Citigroup's debacle.
I told the President that the Mexican government faced an imminent threat of default. Then I asked Larry to explain the situation in more detail... RE: Larry is, of course, Lawrence Summers
“Why didn’t we see this coming?”
Why did so many observers dismiss the obvious signs of a housing bubble, even though the 1990s dot-com bubble was fresh in our memories?
Why did so many people insist that our financial system was “resilient,” as Alan Greenspan put it, when in 1998 the collapse of a single hedge fund, Long-Term Capital Management, temporarily paralyzed credit markets around the world?
Why did almost everyone believe in the omnipotence of the Federal Reserve when its counterpart, the Bank of Japan, spent a decade trying and failing to jump-start a stalled economy?
One answer to these questions is that nobody likes a party pooper.
The crises of the 1990s and the early years of this decade should have been seen as dire omens, as intimations of still worse troubles to come. But everyone was too busy celebrating our success in getting through those crises to notice.
Consider, in particular, what happened after the crisis of 1997-98. This crisis showed that the modern financial system, with its deregulated markets, highly leveraged players and global capital flows, was becoming dangerously fragile. But when the crisis abated, the order of the day was triumphalism, not soul-searching.
Time magazine famously named Mr. Greenspan, Robert Rubin and Lawrence Summers “The Committee to Save the World” — the “Three Marketeers” who “prevented a global meltdown.” In effect, everyone declared a victory party over our pullback from the brink, while forgetting to ask how we got so close to the brink in the first place.
"Det är svårt att vara olyckskorp när allt går som smort"
The vision thing
Her Majesty’s question ("If these things were so large, how come everyone missed them?") has sparked a series of ludicrous claims about the prescience of individual forecasters.
Charlie Bean, the Bank of England’s deputy governor, noted that elements of the global economy had troubled lots of economists and policymakers for a long time.
In his Senate nomination hearing of 2005, Ben Bernanke, the Federal Reserve chairman, said the US financial system had already benefited from a series of crises that had reinforced its ability to cope with difficult times. “The depths, the liquidity, the flexibility of the financial markets has increased greatly,” he said.
Jean-Claude Trichet, European Central Bank president, told four newspapers in mid-July: “Our baseline scenario is that we will have a trough in the profile of growth in the euro area in the second and third quarters of this year and, following this, a progressive return to ongoing moderate growth.” Instead, Europe is staring at the biggest recession since the early 1990s.
Even permanent bears did not see the full bursting of the credit bubble linked with the commodity boom. Nouriel Roubini, the global “Dr Doom” who got much of the crisis right, has also persistently revised his forecasts lower as the credit crunch has bitten harder.
Though there is great entertainment in looking back at the silly things economists have said, more is to be gained by examining the particular failings that contributed to forecasters’ general inability to warn of the current mess.
Stephen King, chief economist of HSBC, says: “Almost all economic models assume that the financial system ‘works’.” Economists in general did not foresee how the looser monetary policy of the early part of the decade could lead to an unprecedented credit expansion.
The natural tendency to seek rationales for events as they unfold, rather than question whether they are sustainable. Kenneth Rogoff, a Harvard professor who is also a former IMF chief economist, thinks the tendency to look on the bright side is particularly prevalent on Wall Street, where “it is difficult to make a living as a mega-bear”, he says.
William White, the former chief economist of the Bank for International Settlements, the central bankers’ bank in Basel, Switzerland, was a persistent critic of lax monetary policy and the failure to stem credit expansion.
Mention must also be given to the notable voices of doom, who got important bits of the puzzle correct even if the timing or other details eluded them.
Good question, Ma'am
House buyers took the view that as long as someone was prepared to lend them money, things would be OK.
The mortgage lenders reckoned that as long as they could package up the mortgages as newfangled financial derivatives (it's a long story, Ma'am) and sell them on, that would be fine.
The financial institutions surmised that as long as the credit ratings agencies were giving the derivatives their seal of approval, everything would be dandy.
The credit ratings agencies thought – actually, it is pretty hard to work out what in God's name the credit ratings agencies were thinking, except that as long as their rivals were giving these assets the thumbs-up, they had better do so as well.
As for the regulators, Ma'am, the point is that they didn't really know and too many didn't want to.
Warren Buffett, a somewhat well-known investor from one of your revolted colonies, called these exotic derivatives "weapons of mass destruction".
The comparison is apter than even Mr Buffett might have thought. The main thing about these derivatives is no one knew how big the stockpiles were, who had them, or what exact form they took.
The smarter economists treated this as a known unknown. They knew that they didn’t know, and they knew that they wanted to know. But the politicians and regulators whose job it was to know, it appears, didn’t want to know, or didn’t want to know badly enough.
How did they get away with it? Partly because there were always some tame economists on hand to say that everything was fine.
These are historic times.
Det behövs bättre regleringar av finansmarknaderna,
Experterna på kreditvärderingsföretag som Moodys, Standard & Poor's och Fitch bidrog till att förvärra finanskrisen.
I debatten sägs det nu vara mer ädelt att söka förklaringar än att peka ut syndabockar, men varför det?
Greenspan: It's a 'credit tsunami'
1992 drabbades Sverige av en valutakris
I debatten sägs det nu vara mer ädelt att söka förklaringar än att peka ut syndabockar, men varför det?
Vi menade då /i Ekonomikommissionens rapport (SOU 1993:16)/, liksom nu, att de ekonomiska problemen inte endast, eller ens i första hand, härrör från ekonomisk-politiska missgrepp, som hade kunnat undvikas med skickligare politiker, experter och ämbetsmän.
The best recipe for avoiding a global recession
Alan Greenspan's tragic mistake
The original bubble was in housing prices and mortgage-related assets,
Testifying before Congress yesterday, Mr. Greenspan pinned the crisis on mortgage securitizers, risk modelers and lending institutions, thus contributing to the Washington narrative that government had little to do with it. The Fed's monetary policy apparently gets a pass.
The media and Members of Congress will use Mr. Greenspan's testimony to impugn /oppose or attack as false or lacking integrity/
Konjunkturcykeln är en del av marknadsekonomin, ungefär som förkylningar är en del av livet
DETTA äR INTE SLUTET. Det är inte ens början på slutet, men möjligen slutet på början.
RE: Ett steg åt höger kan alltid försvaras.
PIMCO’s Investment Committee to a man (no women yet) believes that capitalism is the best and most effective economic system ever devised,
Expect a lengthy recession but not depression, accelerating government deficits approaching a trillion dollars as forecast here in this Outlook several months ago, and
For those of us who believe in free markets, these interventions are unpleasant.
The government has taken ownership stakes in the largest banks in the land. This extraordinary intervention is perilous -- not least to the banks themselves -- unless it is limited in scope and time. Mr. Paulson called the capital injection "distasteful" but unavoidable, and we can't disagree. The trick is to ensure that neither he nor his successors develop a taste for politically directed credit.
The current crisis reminds us that, in a free economy, the price of the greatly improved long-term performance that only free economies can provide is an ineradicable economic cycle.
A Capitalist Manifesto
Ms. Shelton, an economist, is author of "Money Meltdown: Restoring Order to the Global Currency System" (Free Press, 1994).
"Le laisser-faire, c'est fini."
These days, it seems difficult to defend the efficacy, let alone the morality, of an economic approach to human interaction that is now blamed for having put the entire global economy at risk. But that is exactly what we need -- most importantly, from America's next leader.
Deep within the condemning speeches delivered by Mr. Sarkozy, both in New York and Toulon, are the grains of a new approach to capitalism that should give Americans reason to hope, not only for economic salvation but for a sense of redemption on a deeper level. France's president held out the possibility that all is not lost, that we can fix what is broken.
"The financial crisis is not the crisis of capitalism," according to Mr. Sarkozy. "It is the crisis of a system that has distanced itself from the most fundamental values of capitalism, which betrayed the spirit of capitalism."
Who would have guessed that it would take a Frenchman to remind us that hope is the limitless source of power that drives the human spirit to create, to improve, to achieve its dreams; it is the greatest civilizing influence in our culture.
Nyliberalerna tysta så det dånar
Jag kan mycket väl tänka mig att finanskrisen till dels är betingad av bristfällig tillsyn, illa hopkomna regelverk och dåliga belöningssystem i finanssektorn.
This is a difficult time to defend free markets. Nevertheless they must be defended,
Bara för att lista några av de mer
betydelsefulla regleringarna som snedvridit den amerikanska marknaden
så har vi:
Community Reinvestment Act
The Community Reinvestment Act (CRA), enacted by Congress in 1977 (12 U.S.C. 2901) and implemented by Regulations 12 CFR parts 25, 228, 345, and 563e, is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate
Over the past five years, stock buy-backs have increased at a remarkable rate.
New figures coming out of the US economy confirms that in almost every respect it is doing significantly better than expected. It is impressive.
Det räcker inte med att ha rätt, man ska helst ha det vid rätt tidpunkt också.
Felet med Mosesteorin
SvD-ledare 2000-03-02, utdragSom SvD:s EU-expert Mats Hallgren kunde rapportera i onsdagens Näringsliv har EU-kommissionen under Romano Prodis ledning förstått att studera vilka lärdomar Europas beslutsfattare bör dra av den amerikanska modellen och dess väldiga framgångar.Det var på tiden. Efter decennier av skleros och Delorium har EU mycket att lära av den ekonomiska förnyelsen i USA, som tog sin början under Reagan-åren.
"USA har ryckt åt sig ett stort försprång och har världens mest framgångsrika ekonomi" Klas Eklund på SvD:s ledarsida 2000-08-11
Bo Lundgren i Torsdagsbrev nr 21/2001, 11 oktober 2001Vad gäller ekonomin lade Reagans marknadsliberala politik grunden för en uppgångsfas utan motsvarighet i amerikansk historia. Fram till idag har USA, med undantag för två kvartal under krisåret 1991, fått uppleva 17 år av oavbruten mycket stark tillväxt.
President Sarkozy rasade i veckan i Toulon mot förställningen om att marknaden alltid har rätt och att det skulle vara rena galenskapen att politikerna lägger sig i: tiden för laissez-faire är förbi. Och här hemma väntar vänsterseminarier på temat: Finanskrisen – Dödskyss för nyliberalismen?