Jan 29th 2014, 20:34 by G.I. | WASHINGTON, D.C.
After presiding over the Federal Reserve for eight of the most turbulent, crisis-wracked years in its history, Ben Bernanke no doubt hoped to leave on a dull note. It is not to be. Read the rest of this entry »
Jan 28th 2014, 20:39 by G.I. | WASHINGTON, D.C.
If asked to compile a list of economists’ mistakes over the last decade, I would not know where to start. Somewhere near the top would be failure to predict the global financial crisis. Even higher on the list would be failure to agree, five years later, on its cause. Is this fair? Not according to Noah Smith: these, he says, were not errors of economics but of macroeconomics. Microeconomics is the good economics, where economists by and large agree, conduct controlled experiments that confirm or modify established theory and lead to all sorts of welfare-enhancing outcomes.
To which I respond with two words: minimum wage. Read the rest of this entry »
Jan 25th 2014 | From the print edition:
RISK has always had a bit of an image problem. It is associated in the popular mind with gamblers, skydivers and, more recently, the overpaid bankers who crippled the global economy. Yet long-term economic growth would be impossible without people willing to wager all they have by starting a business, expanding an existing one or trying to invent a better mousetrap. Such risk-taking has been disturbingly scarce in America of late: the number of self-employed workers, job-creation at start-ups and the sums invested in businesses have been low.
Though changing appetites for risk are central to booms and busts, economists have found it hard to explain their determinants. Instead, they tend to cite John Maynard Keynes’s catchy but uncrunchy talk of “animal spirits”. Recent advances in behavioural economics, however, are changing that. Read the rest of this entry »
The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. By Erik Brynjolfsson and Andrew McAfee.
IN 2012 Erik Brynjolfsson and Andrew McAfee took a ride in one of Google’s driverless cars. The car’s performance, they report, was flawless, boring and, above all, “weird”. Only a few years earlier, “We were sure that computers would not be able to drive cars.” Only humans, they thought, could make sense of the countless, shifting patterns of driving a car—with oncoming traffic, changing lights and wayward jaywalkers.
Machines have mastered driving. And not just driving. In ways that are only now becoming apparent, the authors argue, machines can forecast home prices, design beer bottles, teach at universities, grade exams and do countless other things better and more cheaply than humans. Read the rest of this entry »
A new regulator may make America’s mortgage giants more forgiving
Jan 18th 2014 | WASHINGTON, DC | From the print edition
DURING the early 2000s Fannie Mae and Freddie Mac, two government-linked agencies that guarantee the majority of America’s residential mortgages, helped to inflate America’s housing bubble with a gusher of easy credit. The pair have spent the past five years trying to make amends, by jacking up fees and tightening standards until only pristine borrowers qualified for their backing. But that may now be changing. Read the rest of this entry »
Sometimes it takes a friendly neighbor to point out how badly you’ve maintained your house. That’s what Jack Lew, America’s Treasury Secretary, has been doing by calling on Europe to beef up its bank resolution regime. Today, Paul Tucker, a former deputy governor of the Bank of England, did the same for America.
On most matters America is far ahead of other countries in both legislation and supervisory enactment of new rules and procedures. But will those new rules actually prevent, or mitigate, the next crack-up?
I have my doubts, and they have grown after reading a provocative new essay by Mr Tucker, and hearing him speak at today’s debut event of the Hutchins Center on Fiscal and Monetary Policy, based at the Brookings Institution. Read the rest of this entry »