Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for January 2010

Dialing back the deflation watch

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In the tussle over whether deflation or inflation is the bigger threat I’ve been firmly in the deflation camp. In the last few weeks, though, I’ve tiptoed closer to neutral. Core inflation hasn’t dropped as much as I’d expected to date, and the drop that has occurred seems entirely due to owners’ equivalent rent. Goods prices inflation has been surprisingly sturdy.

Yesterday’s report by the Congressional Budget Office also prompted me to reexamine my assumptions. Read the rest of this entry »

Written by gregip

January 28, 2010 at 6:05 am

Populists and bankers: Strange meeting

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Jan 28th 2010 | ORLANDO, FLORIDA
From The Economist print edition

The populist left meets the populist right to hammer the Fed

YouTube
YouTube
A star of the tiny screen

[Greg Ip] DEMOCRATS seldom come more partisan than Alan Grayson, who represents Florida’s eighth congressional district in the House of Representatives. He calls Republicans “foot-dragging, knuckle-dragging Neanderthals” and a “selfish party” whose advice to sick Americans is “Die quickly.” Yet when he dropped in on a convention of small-government libertarians in his home town of Orlando, Florida, last year, he was greeted like a rock star. He received two standing ovations and requests for his autograph.

The audience was not applauding Mr Grayson’s stand on health care or any other beloved Democratic cause, but his unrelenting attacks on the Federal Reserve. Though he has been in Congress only a year, his cross-examinations of Fed officials there are YouTube sensations. One, in which he demands to know who got more than $1 trillion in Fed emergency loans, has been viewed more than 3m times.

Mr Grayson’s antipathy towards the Fed is part of a resurgence of political populism on both the left and the right. Read the rest of this entry »

Written by gregip

January 27, 2010 at 10:00 pm

Not liberal or conservative, just incoherent

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IN ITS updated global forecast released this morning, the IMF warns against “premature and incoherent exit” from government support for the economy. “Incoherent” nicely describes the policy debate in Washington. Partisans have aimed their poison at the Federal Reserve and at the government’s fiscal policy choices but what, exactly, do they want? The logical implications of their complaints are contradictory at best and dangerous at worst. Read the rest of this entry »

Written by gregip

January 26, 2010 at 7:01 pm

America’s bail-out bill: Cheap as chips?

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Jan 14th 2010 | WASHINGTON, DC 
From The Economist print edition

America is touting the low price of its financial bail-out. It may be too optimistic

Illustration by Peter Schrank
Illustration by Peter Schrank
 

 

[Greg Ip] COULD the worst financial crisis in history really also be one of the cheapest? America’s Troubled Asset Relief Programme (TARP), created at the height of the crisis in 2008, will end up costing taxpayers less than 1% of GDP, Treasury officials now believe. By comparison, previous systemic banking crises have on average cost 13% of GDP to resolve, according to estimates by the International Monetary Fund. “This is a pretty good return on investment,” Ben Bernanke, chairman of the Federal Reserve, told Time.

It is not just the Americans who are bullish on bail-outs. Read the rest of this entry »

Written by gregip

January 14, 2010 at 6:00 pm

Central banks under fire: Policy punchbags

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Jan 14th 2010 | WASHINGTON, DC 
From The Economist print edition

From Argentina to America, politicians are taking aim

Illustration by S. Kambayashi
Illustration by S. Kambayashi
 

 

[Greg Ip] RICHARD FISHER, president of the Federal Reserve’s Dallas regional bank, did not hold back. Invoking the hyperinflation of Weimar Germany and Zimbabwe, he warned on January 12th that for Congress to tamper with the Fed’s independence would lead “directly to economic ruin.”

This is hyperbole, to be sure, but the threat of political meddling with independent central banks is genuine, and not just in America. Read the rest of this entry »

Written by gregip

January 14, 2010 at 5:00 pm

The Financial Crisis Inquiry Commission: That 1930s show

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Jan 7th 2010 | WASHINGTON, DC 
From The Economist print edition

A Depression-era crusade against Wall Street has a 2010 revival

Getty Images
Getty Images
Pecora in his pomp

[Greg Ip] THE battle against the financial crisis may be ending, but the war over why it happened has barely begun. The most ambitious effort yet to settle the story begins next week with the first hearing of the Financial Crisis Inquiry Commission.

Congress gave the ten-member bipartisan commission a sprawling mandate: to investigate at least 22 potential causes, from excess global savings to short-selling, and to explain why specific firms collapsed or needed bail-outs. The report, due by December 15th, is not supposed to contain recommendations but probably will.

Though modelled on the body that investigated the attacks of September 11th 2001, the spiritual father of this venture is the Pecora Commission. Read the rest of this entry »

The Fed discovers Hyman Minsky

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  • Free Exchange Jan 7th 2010, 13:47 by The Economist | WASHINGTON
  • [Greg Ip] BEN BERNANKE’S meticulous argument on why the Fed’s monetary policy did not cause the housing bubble left largely unanswered a more interesting question: if low interest rates didn’t cause it, what did?

    For that, you should read the Fed staff working paper that formed the basis for most of Mr Bernanke’s speech. It’s interesting not just for its content but what it says about how the Fed’s view of the world and how its mission may be changing. Read the rest of this entry »

    Written by gregip

    January 7, 2010 at 1:47 pm

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