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How the U.S. can escape the pending economic black holeJune 7, 2012
In the meantime, we are beginning to see how a slowing of economic activity in Europe can impact other countries, with Chinese and Indian growth declining. And as growth in those countries slows, so, too, does demand for raw materials from Australia, Brazil and South Africa. Meanwhile, the U.S. could see yields on government bonds rise significantly if the Chinese government substantially reduces its purchases (as exports fall). This has the potential to create a vortex in which the entire global economy slows down.
The United States government, the Fed and financial markets don't have a great track record when it comes to spotting bubbles. The financial markets missed the dot com bubble in the late 90's and, more recently, the Fed didn't pay close enough attention to the housing bubble, which peaked back in 2006. Is it possible that we could be in the midst of yet another bubble?
Assuming the desirability of a recession rate, speed of economic growth, and level of equality all divorced from their causes is not a leap of logic we should lightly undertake.
The idea former FDIC Chairwoman Sheila Bair proposes in her Washington Post op-ed is completely crazy, but that is the point. She is just articulating what Fed policy is for the financial system, suggesting it for the population as a whole, and showing it to be crazy on both fronts. Here is a guide to understanding the Bair tongue-anchored-to-cheek op-ed.
What new information is telling us about the causes of the financial crisis and how they relate to the economy todayApril 9, 2012
A significant amount of research has already been made about the financial crisis. But a midterm primer is nevertheless necessary;it is critical to assess the nature of the crises to ensure that the proper lessons are learned.
This article aims to present a history on the causes of the financial crisis that first emerged in the U.S. in 2007. Then it will analyze the roots of the current state of the economic crisis in Europe and the U.S. It will also assess the effects of the crises on the European and American economies. Consequently, a range of topics are discussed in the article, some of which have received deeper treatment elsewhere in economic literature, but have not been pieced together to provide a coherent past and present picture of the situation.
Back in February Eric Posner and Glen Weyl, both of the University of Chicago and deservedly respected economic and legal minds, wrote a paper proposing a Financial Products Agency. The idea is relatively simple—just as the FDA must approve new food and drug products for consumption, an FPA should approve all new financial products with a test measuring for social benefit. This is a terrible idea for at least three reasons.
View Resources by Type
- Refining the Story of the Financial Crises in Europe and the USA
What new information is telling us about the causes of the financial crisis and how they relate to the economy today
Anthony Randazzo and Murat Yulek
April 9, 2012
- The Hayek Rule
A new monetary policy framework for the 21st century
Marius Gustavson and Anthony Randazzo
November 9, 2010
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