Per Ezra Klein, we learn that Larry Summers has said this:
As for [Milton] Friedman -- I'm not so sure he looks bad. What is most screwed up today? GSEs, Citibank, regional banks. What is most regulated? Same list. What is least screwed up? Hedge funds and the like. What is least regulated? If regulation means the jihad against short selling that the Securities and Exchange Commission is engaged in, then god help us all.
The only reason "regulated" banks are the "most screwed up" now is because the "unregulated" investment banks are "gone." And as for hedge funds:
The hedge fund industry has been hit hard by the worst global financial and economic crisis in decades.
November import and export prices have been reported by the Bureau of Labor Statistics, and they reflect firmly implanted deflation. Monthly prices for imports declined (-6.8%), as did export prices (-3.2%). Even leaving aside Oil, monthly import prices declined (-1.8%) .
Even year over year comparisons now show deflation:
- all imports (- 4.4%)
- all exports (- 0.2%)
The pages so far are OK, but I think the denizens of EP can add a lot to those pages (and I wouldn't be surprised if many of you already have). What I am especially worried about are attempts by wrong-wingers to rewrite certain parts, as I gather from the discussion pages has happened already. So, I appeal to everyone here to look at those Wikipedia pages every once in a while, and help keep them accurate.
Look at the Base Money chart and the Reserve Bank Credit chart. Base money is soaring but all of it is sitting in bank reserves. In other words, banks are not lending. Clearly we have a huge monetary distortion, but banks seem to understand that lending money in this environment would do nothing but increase losses
Of course, Mish's article is simply received wisdom at this point. There can be no recovery until banks start lending, and they are refusing to lend.
There's just one problem with this argument: it isn't true.
Investors are so nervous they're willing to accept the same return from government debt that they'd get from burying money in a coffee can — zero.
Hmm, suddenly apparently the financial equivalent of a mattress doesn't seem so bad; in fact, in trading at times T-bills hit a slightly negative rate.
As a psychologist, I see people acting irrationally, making miscalculations, and operating against their self-interest so often, that the fundamental assumption of economic theory strikes me as obviously and patently absurd.
This would be very amusing except for the fact that economists make deductions about public policy based on this approach, and then convince policy makers to follow their recommendations.
Damn, talk about a pretty intense week! The auto sector looks like it just...just might get saved. Still, it looks as if the issue of over capacity is being looked on, which means job cuts. Sadly, that seems to be the theme of this week's manufacturing update. Well actually there is something on health care...think of it as "nyceve lite". They say it gets darkest before the light, well this must be a long tunnel then. ISM is saying that '09 will suck as bad as 2008. Well before I dispense with the unfortunates, it's time for the Numbers!
Recent comments