Archive for February 2009
The government’s finances: Brave rhetoric, grim reality
The biggest threat to Barack Obama’s good fiscal intentions is the economy
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The original article is linked here.
FOR a man who is likely to run a budget deficit in excess of 12% of GDP this year, Barack Obama can do a surprisingly good impression of a fiscal hawk. Just days after signing into law a huge $787 billion fiscal stimulus, he kicked off a “summit” of congressional leaders, administration officials and policy wonks by warning of “another crisis down the road as our interest payments rise, our obligations come due”. Read the rest of this entry »
Obama and Congress: A brighter future, but who pays?
From Economist.com
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The original story is linked here.
AS A new president, Barack Obama’s first speech to Congress was not, officially, a state-of-the-union address. That was just as well: its current state is awfully precarious. On Tuesday February 24th, a few hours before he spoke to the Senate and House of Representatives, a survey reported that consumers’ confidence in the future was at its lowest in 40 years of polling.
Mr Obama did not sugar-coat matters. Read the rest of this entry »
Can’t pay or won’t pay?
America’s foreclosure plan
Feb 19th 2009 | WASHINGTON, DC
From Economist.com
Barack Obama’s team wades into a debate over what is driving foreclosures
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NO PART of the financial crisis has received so much attention, with so little to show for it, as the tidal wave of home foreclosures sweeping over America. Government programmes have been ineffectual, and private efforts not much better. Now it is Barack Obama’s turn. On Wednesday February 18th he pledged $75 billion to reduce the mortgage payments of homeowners at risk of default. Read the rest of this entry »
America’s economy: The second derivative may be turning positive
Feb 19th 2009 | WASHINGTON, DC
From The Economist print edition
When the going gets tough, the tough get their maths books out
MANY of the diehard optimists on Wall Street have been beaten to a pulp by now, but those still standing have fallen back on a nifty bit of calculus. The second derivative, they say, is turning positive. That means that although the economy is spiralling down, it is doing so more slowly. Read the rest of this entry »
Out of Keynes’s shadow
Feb 12th 2009 | WASHINGTON, DC
From The Economist print edition
The original story is linked here.
Today’s crisis has given new relevance to the ideas of another great economist of the Depression era
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SHORTLY after he was elected president, Barack Obama sounded a warning: “We are facing an economic crisis of historic proportions…We now risk falling into a deflationary spiral that could increase our massive debt even further.” The address evoked not just the horror of the Depression, but one of the era’s most important thinkers: Irving Fisher.
Though once America’s most famous economist, Fisher is now almost forgotten by the public. If he is remembered, it is usually for perhaps the worst stockmarket call in history. In October 1929 he declared that stocks had reached a “permanently high plateau”. Today it is John Maynard Keynes, his British contemporary, who is cited, debated and followed. Yet Fisher laid the foundation for much of modern monetary economics; Keynes called Fisher the “great-grandparent” of his own theories on how monetary forces influenced the real economy. (They first met in London in 1912 and reportedly got along well.)
As parallels to the 1930s multiply, Fisher is relevant again. Read the rest of this entry »
Our Financial 9/11*
Remarks by Greg Ip, Donald W. Reynolds Distinguished Visiting Professional
Washington & Lee University, Feb. 5, 2009
When confronted with new challenges, we all look for analogies in our personal experience. To me this crisis feels in many ways like the financial equivalent of 9/11. Like most of you, I remember 9/11 quite clearly. It was Tuesday morning and our staff meeting in the Wall Street Journal’s Washington bureau was about to begin when the planes struck. After realizing what was happening, we got to work reporting the story. When I was done that evening, I went home on the subway. There were far fewer people than usual. And as I watched others ride the escalator up with me, I wondered, how many of us really know how much our lives are about to change?
I recently had a very similar feeling. Read the rest of this entry »
Can the centrists hold?
From The Economist print edition
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As politics reverts to its usual fractious state, Barack Obama’s centrist advisers, the unions and the angry left in Congress are all competing for his ear
IT HAS been a rough few days for Barack Obama. He has lost, in Tom Daschle (see article and Lexington) a close ally on whom he depended for his health-reform plans. Mr Daschle is now the third of his planned appointees to fall by the wayside; Mr Obama’s carefully cultivated image of competence and coolness is starting to fray. Worse, as The Economist went to press the new president’s vast stimulus plan (now worth around $900 billion) faced the prospect of substantial change if it is to pass the Senate where Republicans hold a blocking minority; it was rammed through the House without attracting a single Republican vote in favour.
But the re-emergence of the usual partisan sound and fury obscures a much more interesting question. Mr Obama amassed a solidly liberal record as a senator, then moved towards the centre during the campaign and surrounded himself with centrist advisers. Is his party now dragging him back to the left? Read the rest of this entry »
Why Treasury bonds are selling off
Too much of a good thing
From The Economist print edition
The original story is linked here.
A wave of new borrowing threatens a port in a storm
IN THE trouble-tossed world of finance, the one safe place during the credit crisis has been America’s vast and liquid Treasury-bond market. No longer. Since touching a record low of 2.04% in mid-December, ten-year bond yields shot up above 2.9% on February 4th, continuing a sell-off that made January the worst month for government securities in decades.
There are several reasons for the reversal of fortunes, not all of them bad. Read the rest of this entry »
