Economics Roundtable
Payroll Employment
The December figure for U.S. payroll employment comes out Friday. The November figure was down over 500,000 jobs. Is a loss of 1,000,000 jobs possible for December?
Charts to watch:
2004-2009
1988-2009
12/31/08 -- The growth in excess reserves has slowed, at least for the past two weeks. Excess reserves have grown to $798 billion, which is an increase of only $24 billion.
12/18/08 -- Excess reserves increased from $590 billion to $774 billion over the past two weeks. Required reserves are now $53 billion. Total reserves equal about 52% of M1.
12/4/08 -- Excess reserves decreased from $605 billion to $590 billion over the past two weeks.
11/20/08 -- Reserves with the Fed increased by $237 billion over the past two weeks. Required reserves are now $48 billion, and total reserves are $653 billion, leaving excess reserves of $605 billion. Reserves are now equal to about 44% of the money stock M1.
August, 2008 -- Excess reserves are $2 billion, a figure that is typical of recent years.
Monetary Policy in Three Steps
Step 1: Buy private assets from banks while selling Treasuries, effectively trading private assets for Treasuries, leaving reserves with the Fed unchanged.
Step 2: Buy private assets from banks, paying with deposits with the Fed (new money) because the portfolio of Treasuries is shrinking. Banks make little attempt to convert deposits with the Fed into loans. Nothing much happens to loans and the money supply, but excess reserves explode.
Step 3: Banks start to expand loans on the basis of massive excess reserves. The Fed has to drain hundreds of billions in excess reserves to regain control of the money supply. The Fed does this by selling private assets back to the banks.
We are now well into Step 2. Step 3 should be interesting.
Why AIG was in the CDS Business
Felix Salmon explains how taxpayers get to pay the claims after AIG collected the premiums. It is really very simple.
VoxEU -- Free Online Book
Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis -- Contents Page
Richard Baldwin, Barry Eichengreen
"Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection of essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks."
Economic Principals
Congratulations to David Warsh on the occasion of the 25th anniversary of EP.
The First Global Financial Crisis
of the 21st Century
A VoxEU.org Publication
Edited by Andrew Felton and Carmen Reinhart
Read the announcement
and/or download selected chapters.
Review: the topic itself is important, but this book also marks a new direction for online discussion.
Great Articles by Famous Economists
The Library of Economics and Liberty includes The Concise Encyclopeida of Economics. To see how many well-known economists have contributed browse by category .
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I was talking about quant funds this afternoon, and got to wondering what on earth they're doing these days, given that their m.o., up until say the summer of 2007, was to find trading ideas, backtest them, try them out in real life for a while, and then pull the ...
How to tackle foreclosures and unemployment at the same time: Get some desperately-needed empirical data on loan mods.
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Here are some snips from the article, followed by a rebuttal.
Rick and Noreen Capp recently reduced their credit-card debt, opened a savings account and stopped taking their two children to restaurants. Jessica and ...
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Broken China
In December 2004 we reported
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Chicken ...
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I've known Leon??for more than two decades.?? If you're looking for someone from outside the agency who ...
Here's my "Fiscal Fitness" column from today's Roll Call.
Welcome to 2009, the Year of the New Budget Debate
January 6, 2009
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The best of the rest of the economics web
TODAY's recommended economics writing: While some criticise the proposed ...
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ÂWhile the opportunity to serve my state and country during these turbulent and dynamic times is ...
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On the informational value of markets
LET me just add a comment to my colleague's post on speculation ...
How low can recovery rates go? Today the CDS auction on Tribune's defaulted bonds settled at 1.5 cents on the dollar, which is low but in line with expectations of bondholders essentially getting nothing once the secured creditors have been paid.
Much more startling is the price on the ...
Orders placed with U.S. factories in November fell twice as much as forecast, signaling businesses are ...
Let T be the number of years person X has been employed in a tenure track or tenured academic position. Let W(T) be the work activity level of person X in year T (Note, W(T) is a measure of input not a measurable output).
The First Law ...
Betting on U.S thoroughbred horse races dropped 7.16 percent in 2008 from they year before, according to statistics released today by Equibase, the industry's record keeper.
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The December decrease was 20.3 percent, to $820 million from $1 billion in December 2007.
Source: ...
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Laffer-able, Marion Maneker, BP Cafe: ...Art Laffer ... was on Fast Money... The segment ...
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What's the matter with derivative trading?
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Have you voted for EconTalk today?
We are in the lead but the gap is closing. Now is the time for all good men and women to come to the aid of the podcast.
You can vote once every 24 hours until January 13th. So if you haven't voted yet get going. ...
Today's Dean of development economists, William Easterly, won the inaugural Hayek Prize, offered by the Manhattan Institute, for his splendid book The White Man's Burden. Congratulations Bill!
Here's the Hayek Lecture that Bill delivered this past October when he was awarded the prize formally. Like all of ...
From the Women on the Web:
Four city workers â who had been polling their money in the office pot for nearly five years under the verbal agreement that theyâd all share the winnings â were out of the office and unavailable to contribute to the office pool for ...
Hot on the tails of Steve Jobs’ hormones comes Macworld, which today held its keynote address. Here’s the latest and greatest blanket update from Macworld, summarized from Jason Snell and Dan Moren’s stellar play-by-play coverage on Macworld’s website:
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I've been catching up on the art blogs this slow news day, which means catching up on a long and sometimes confusing debate about deaccessioning which was sparked by the sale of two paintings by New York's National Academy. Ground zero for this debate is Donn Zaretsky's Art ...
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A humorous article from today's St. Petersburg Times discusses Florida's entry into Powerball. Florida is the last state, among those that have lotteries, to join a multistate game such as Powerball or Mega Millions. Like legislators in other states, Florida policymakers are not content with the huge amount of ...
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From the FOMC Minutes:
In the forecast prepared for the meeting, the staff revised down sharply its outlook for economic ...
The everyone else was doing it excuse
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The Washington Post reports:
The government's billion-dollar program to help people prepare for the transition to digital television has run out of money, potentially leaving millions of viewers without coupons to buy converter boxes they need to keep their analog TV sets working after the switch.
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The latest episode of EconTalk is Pete Boettke talking about the Austrian theory of business cycles.
Is Steve Jobs dying? I don’t think he is. A survivor of pancreatic cancer is bound to have a host of follow-up problems that aren’t necessarily terminal. Indeed, the fine details of Jobs’ testoserone levels are hardly the issue. The ...
Live from San Francisco: The iTunes store is going DRM-free. (The record labels get variable pricing.) Good riddance.
The US Agency for International Development will be hosting the Development 2.0 Challenge Awards Ceremony this Thursday. USAID explains the rationale behind the contest:
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Some baseball fans have been cursing the Yankees for continuing their profligate ways despite the recession, but New York Gov. David Paterson isn’t likely to be one of them. His state, struggling to close a $15 billion budget deficit could get some help from the highest paid Yankees,
Confidence in America strangely resilient
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A look at some stimulus calculations
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Yesterday, I posted about the increase in total bankruptcy petitions. Today, I want to focus on one particular subset of ...
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Taken as a whole, government ...
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Hyundai Motor, South Koreaâs biggest carmaker, ...
From the Orange County Register’s Erika Chavez:
Sandra Rogoff reached into the cupboard on Oct. 10 (2008) and opened a box of crackers, only to find an unmarked white envelope taking up residence next to the bagged crackers. ...
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Eric Falkenstein sums up 2008 through a ratings-agency lens:
I think 2008's problem was mainly because after the rating agencies were exposed as making an error on their AAA and AA ratings, all investors viewed such securities skeptically. What was previously an asset class that did not require ...
Michael Kaiser makes some good arguments in favor of increased arts funding, but unfortunately he mixes them up with bad ones, and he glosses over the best ones. The result is that Tyler Cowen gets to take the moral high ground by saying that "culture for the rich" ...
6. Do what you do best, trade for the rest.
and
8. Quantity and quality of available resources impact living standards.
Much of what is currently available on the history of globalization seems to focus on ...
Please let us know what your students think.
Legislation designed to stem foreclosures by allowing bankruptcy judges to erase some mortgage debt will be introduced by Congressional Democrats on Tuesday, and hopes are high that it will pass after a similar plan failed last year.
...
The legislation would ...
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in November, fell 4.0 percent to 82.3 from a downwardly revised reading of 85.7 in October, and is 5.3 percent below November 2007 when it was 86.9. The ...
A daily round-up of economic news
A DAILY round-up of economic news:The inadvertent petrol price holiday could be ...
The recession hits the lottery
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Eric Falkenstein sums up 2008 through a ratings-agency lens:
I think 2008's problem was mainly because after the rating agencies were exposed as making an error on their AAA and AA ratings, all investors viewed such securities skeptically. What was previously an asset class that did not require ...
Bloomberg: Obama is working on a package combining tax cuts and spending on infrastructure, such as roads, bridges and transit systems, to boost growth.
It's an old story, but it's getting worse and so ignoring the 800-pound elephant in the room is getting tougher by the month.
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Government throwing oodles of other people's money at problems -- how's that for change we can believe in?! Uncle Sam hasn't tried such a creative approach since the presidency of George W. Bush.
Here are three $750 billion stimulus plans. All three are financed by borrowing:
1. Give every American a "tax rebate" of $2500.
2. Hire 10,000,000 Americans and pay them $75,000 to dig a ditch for six months and spend the next six months filling it back in.
3. Hire 10,000,000 Americans and pay ...
Around election time, the House Transportation and Infrastructure Committee had identified $45 billion in ready-to-go infrastructure projects a stimulus package. Now TrafficWorld reports that the Committee now is looking at $85 billion:
The recommendations, outlined in a Dec. 12 memo, include $30 billion for highways ...
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From the 12/29 NYTimes (Focus on Weatherization is Shift on Energy Costs):
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Correct those ...
The U.S. Environmental Protection Agency, location of the famous "Convergent Validity" presentation.
Photo Credit: Jana Groothuis
Do mandated technological changes cause economic growth? That seems to be the claim in this