Ezra Klein

WHERE ARE THE POLITICAL ECONOMISTS?

0422_Fernholz2_lead.jpgSimon Johnson is an economist, but he's also, as Tim Fernholz writes, a pretty committed political economist. The core of his approach to the financial crisis has been an analysis of power relations, not mere capital inflows. Some folks argue that the financial crisis is a simple story of bad decisions by poorly incentivized bankers.

OBAMA ON REGULATING THE CREDIT CARD INDUSTRY.

Obama met with some representatives from the credit industry today in advance of his administration's effort to better regulate the industry. Which is the sort of thing that frequently frustrates Obama's left-leaning critics. But walking out, he gave some quick remarks that should comfort them, including this statement of regulatory principles:

VOLUME AND RISK.

The argument that Wall Street is actually allergic, rather than attracted, to risk brought to mind a quote from Michael Lewis's Liar's Poker:

WHAT WILL YOU RISK FOR RISK?

risk_200x200.jpgFelix Salmon's in Dallas today giving a terribly depressing speech to the Regional Bond Dealers Association. A terribly depressing speech which, through the magic of the interwebs, can now depress all of us! In particular, I recommend the beginning, which takes on the prevailing wisdom that Wall Street developed an overly high tolerance for risk.

THE WORLD BANK STIMULUS.

It's good news that the World Bank is going to offer $55 billion in infrastructure stimulus to developing nations. But maybe it's testament to the times that that number seems pretty low to me: $55 billion just isn't much money given the scale of the problem. And this is a bigger issue for developing nations. A couple years of output gap in America means a couple years of pretty unpleasant outcomes. A couple years of output gap in a developing nation means real misery, and a backslide that many families will not recover from.

RETHINKING PELOSI AND HARMAN.

I'm pretty struck by news that Nancy Pelosi was informed that the government was wiretapping Jane Harman. This, it seems, is standard operating practice: According to the Post, "it is a 'tradition' for the top Democrat and Republican in the House to be alerted whenever a member is under surveillance using wiretaps or other methods." We don't know the exact date that Pelosi was informed of the wiretap, but we know it was a couple of years ago, which throws Pelosi's efforts to remove Harman from the chairmanship of the House Select Intelligence Committee into a new light. At the time, that fight was largely seen as Pelosi prosecuting a grudge against Harman.

THE VAST MAJORITY DOESN'T MATTER.

I'd missed this the other day, but Tim Geithner apparently comforted the markets by assuring them that the “vast majority” of banks are well capitalized. But this, as Paul Krugman says, is meaningless. "There are 1,722 institutions on the Fed’s list of 'large commercial banks'....But the big guys are where the money is. The top 10 institutions on that list have 58 percent of the assets.

POST POST.

The news is true: On May 18th, I'll be moving about two blocks east and two blocks south to the Washington Post's massive building. I will have part of a desk rather than much of an office. I will not have natural light. This blog, too, will change its home, moving to the "columnists and blogs" area of the Post's Business section. It will have a gray and white color scheme rather than a red one. It will have a .com address rather than a .org.

FERGUSON!

clarissa03.jpgAs a sort of follow-up to the title of the last post, I became interested recently in what happened to Ferguson from Clarissa Explains It All. (This blog, as you know, is not afraid to engage the big questions.) Turns out that after Clarissa, Jason Zimbler, the actor who so brilliantly portrayed Ferguson, left the business and went to college at Notre Dame. No more acting.

DOUG ELMENDORF EXPLAINS IT ALL.

1056345190_esClarissa.gifI don't think CBO Director Doug Elmendorf is quite the blog enthusiast that Peter Orszag was. But week by week, his blog is rediscovering its rhythm. In particular, Elmendorf has a useful post today summarizing a lecture he gave to Greg Mankiw's famed Intro to Econ class. It's as clean a breakdown of the contributors to the coming fiscal crackup as you're like to see.

RECESSIONS AND SUICIDE.

The suicide of Fannie Mae's chief financial officer reminded me of an old stat I'd read about the Great Depression being a historic apex for suicides. That, it seems, is correct. The peak was in 1933, with 17.4 out of every 100,000 Americans killing themselves. So can we expect to see a sharp rise in suicides again?

BEING BEN NELSON.

If you were Ben Nelson, wouldn't you be loudly signaling that you're “fully prepared" to vote against health reform? A historic transformation of a $2 trillion industry and you are the hinge vote that might decide passage. A simple public servant like, say, Carl Levin, just votes for the package because it's a good thing to do and it won't pass the Senate without a lot of simple "yes" votes. But if you're lucky enough to be one of the complicated "yes" vote -- and there can only be a couple of those -- you get to decide what the final bill looks like. You get to decide the shape of American health care.

USING ANTITRUST LAW TO BREAK UP THE BANKS.

Looks like Simon Johnson is advocating using the antitrust laws to limit the size of banks before members of Congress. I'm glad to see the aproach getting some attention.

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