Ben Bernanke and I went to the same graduate school. We’re on opposite sides of the bailout issue. My joke is that one of us is on crack, and it’s probably me. My more serious answer is in this Cato podcast.
Ben Bernanke and I went to the same graduate school. We’re on opposite sides of the bailout issue. My joke is that one of us is on crack, and it’s probably me. My more serious answer is in this Cato podcast.
Sep 26 2008
It's easy to explain why financial markets like the bail-out - it's a big transfer from tax-payers to investors. But Arnold points out that the market liked Nixon's price controls, too: "In 1971, the market gave a huge thumbs-up to wage and price controls, which turned out to have damaging economic effects that persis...
Sep 26 2008
Several readers suggest that I bet Andy Kessler about the U.S. government turning a profit on its bail-out. Here's Kessler's claim:My calculations, which assume 50% impairment on subprime loans, suggest it is possible, all in, for this portfolio to generate between $1 trillion and $2.2 trillion -- the greatest trade e...
Sep 26 2008
Ben Bernanke and I went to the same graduate school. We're on opposite sides of the bailout issue. My joke is that one of us is on crack, and it's probably me. My more serious answer is in this Cato podcast.
READER COMMENTS
Jacob Wintersmith
Sep 27 2008 at 5:33am
You point out that in spite of troubles in the financial sector the unemployment rate is only 6.1%, which is pretty average. This strikes me as an odd way to estimate the impact of failures in finance on the broader economy.
If the finance sector is partially crippled, my understanding is that this would decrease employment primarily because businesses would have difficulty obtaining loans for good projects. Thus, it seems that the employment rate would be a lagging indicator of the impact of finance problems. Wouldn’t it be better to look directly at how these troubles are affecting the availability and price of credit? Or am I missing something?
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