Category Archives: Financial Crises

Were mortgage securities badly mis-rated?

Juan Ospina and Harald Uhlig write, AAA securities did ok: on average, their total cumulated losses up to 2013 are 2.3 percent. . .Losses for other rating segments were substantially higher, e.g. reaching above 50 percent for non-investment grade bonds. … Continue reading

Posted in Financial Crisis of 2008, financial markets, Housing and housing finance | 20 Comments

The Debt Spiral

Several Hoover Institution scholars write, In recent months, we have seen an inevitable rise in interest rates from their low levels of recent years. Rising interest rates and increasing deficits threaten to build upon each other to send public debt … Continue reading

Posted in government debt crisis | 17 Comments

Wither the center? post-election Italy

Alberto Mingardi writes, A country like Italy ought to have a moderate, responsible, free enterprise-oriented right. But it is indeed an “ought”: not, in our case, an “is” and a truly felt tradition in this country. Michael Barone writes, As … Continue reading

Posted in Financial Crisis of 2008, Politics | 15 Comments

Bitcoin and the prospects for a dollar collapse

For Medium, I take a skeptical view of the value of Bitcoin as a hedge against hyperinflation. For citizens looking for hard assets, gold is not the only option. Other commodities, such as copper or wheat, are traded in futures … Continue reading

Posted in financial markets, government debt crisis | 9 Comments

Cantercap Charlie on finance and the 2008 crisis

He wrote, if banks are doing their job, the banking system is illiquid, and the rest of the economy —us— have lots of cash. In Econ 101 this is known as “maturity transformation.” Liquidity-wise, the banking system is simply the … Continue reading

Posted in Financial Crisis of 2008, financial markets | 8 Comments

Complexity illustrated by the financial crisis

This IGM poll of leading economists on the importance of various factors in the financial crisis of 2008 provides interesting results. The poll lists 12 factors, and all of them receive at least some positive weight. In fact, this under-estimates … Continue reading

Posted in Financial Crisis of 2008, links to my essays | 3 Comments

Regulatory miscalculation

Two examples. 1. Stephen Matteo Miller writes, While these findings do not establish that the Recourse Rule caused the financial crisis, they are consistent with the view that the rule encouraged securitizing banks, especially the largest ones, to hold the … Continue reading

Posted in Financial Crisis of 2008, links to my essays | 1 Comment

The CBO gets worse

John Taylor writes, The second CBO procedural change was to discontinue the use of the “alternative fiscal scenario” in the long-term projections There is more at the link. I think that CBO modeling is way over-rated and biased toward interventionist … Continue reading

Posted in Economic education and methods, government debt crisis | 2 Comments

Debt and the economy

Kevin Erdmann comments, Debt isn’t a sign of risk taking. Equity is. The reason Ford has lots of debt isn’t because risk-seeking shareholders demand that they leverage up. Risk-seeking shareholders buy unleveraged Tesla shares. The reason Ford has lots of … Continue reading

Posted in Financial Crises | 18 Comments

Stanley Fischer, pre-crisis

He writes, We have a better capitalized and more liquid banking system, less run-prone money markets, and more robust resolution mechanisms for large financial institutions. However, it would be foolish to think we have eliminated all risks. For example, we … Continue reading

Posted in Financial Crises | 14 Comments