November 2009
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Recent Posts

Deflation Case Study: Spain

Things are going so bad economically in Spain that the national pastime has changed from bullfighting to bearfighting. Now that I have that terrible joke out of the way, what are the prospects for deflation in Spain? It had been characterised, like quite a few other advanced economies, with rapidly rising credit and asset prices. [...]

FDIC Gets By With a Little Help From It’s Friends

In an extraordinary decision today, the FDIC board approved a move where they will require U.S. banks to pre-pay three years worth of premiums in a cash grab that will net the FDIC US$45 Billion. This move allows the banks to structure the payment on their own books over the three years rather than at [...]

Nouriel Roubini: Rapid economic recovery unlikely

AEI Event: ” The Deflating Bubble, Part VI: The Lessons of the Bubble and Crisis,” Cosponsored by the Professional Risk Managers’ International Association, October 22, 2009 Credit markets have recovered, although they still reflect massive government financial intervention. The financial panic of 2008 and 2009 has passed, though now bank failures are notably increasing. The net worth of the Federal Deposit Insurance Corporation is dropping, and estimates for its deficit are growing, but its obligations are ultimately US Treasury obligations. Average house prices seem to be stabilizing, but commercial real estate prices are dropping. Huge losses from the deflation of the great twenty-first-century bubble have been recognized or realized, and though more remain, financial markets have regained their appetite for risk. At this event, our expert Deflating Bubble panel defined the lessons of the whole twenty-first-century financial experience and made related recommendations for future financial policy. Speakers included AEI economists Desmond Lachman and John H. Makin; New York University professor of economics Nouriel Roubini; R. Christopher Whalen, managing director of Institutional Risk Analytics; and Thomas Zimmerman, managing director at UBS Investment Bank. AEI resident fellow Alex J. Pollock [...]

Dr Bernanke or: How I Learned to Stop Worrying and Love the Banks

With apologies to the late Stanley Kubrik (and anyone else who has used that quote in the context of the current GFC!).

Inspired by a question on Steve Keen’s Blog I thought it would be fun to see what is happening with respect to bank failures now compared to past crises. I’m sure this type of analysis [...]