Found 401 article(s) in category 'Q3: Financial Crisis?'

Hysteresis and Fiscal Policy During the Global Crisis

Hysteresis and Fiscal Policy During the Global Crisis. Lawrence Summers, October 12, 2016, Paper, “Conventional wisdom on supply and demand suggests that demand shocks are cyclical or transitory, and that only technology shocks are responsible for trend changes. This column argues that cyclical events can have permanent effects on demand, and therefore GDP. It is time for policymakers to start considering the possibility of hysteresis seriously.Link

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Ability to Fight Recession a Matter of Serious Concern

Ability to Fight Recession a Matter of Serious Concern. Lawrence Summers, October 10, 2016, Video, “The concern about low interest rates and the ability to fight off a recession should be keeping central banks up at night, former Treasury Secretary Larry Summers told CNBC on Monday. That’s because interest rates typically come down 500 basis points to contain a recession, and according to market pricing, there’s not going to be 500 basis points of room anytime soon, he said in an interview with “Closing Bell.”Link

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Understanding Bank Risk through Market Measures

Understanding Bank Risk through Market Measures. Lawrence Summers, Fall 2016, Paper, “Since the financial crisis, there have been major changes in the regulation of large banks directed at reducing their risk. Measures of regulatory capital have substantially increased; leverage ratios have been reduced; and stress-testing has sought to further assure safety by raising levels of capital and reducing risk-taking. Standard financial theories predict that such changes would lead to substantial declines in financial market measures of risk.” Link

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China is the biggest threat to the global economy right now

China slowdown is global economy’s biggest threat. Kenneth Rogoff, September 26, 2016, Video, “The former chief economist of the International Monetary Fund has told the BBC a slowdown in China is the greatest threat to the global economy. Ken Rogoff said a calamitous “hard landing” for one of the main engines of global growth could not be ruled out. “China is going through a big political revolution,” he said.Link

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The Perils of Debt Complacency

The Perils of Debt Complacency. Carmen Reinhart, September 28, 2016, Opinion, ““What a government spends the public pays for. There is no such thing as an uncovered deficit.” So said John Maynard Keynes in A Tract on Monetary Reform.  But Robert Skidelsky, the author of a magisterial three-volume biography of Keynes, disagrees. In a recent commentary entitled “The Scarecrow of National Debt,” Skidelsky offered a rather patronizing narrative, in a tone usually reserved for young children and pets, about his aged, old-fashioned, and financially illiterate friend’s baseless anxiety about the burden placed on future generations by the rising level of government debt.Link

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The Reasons Behind the Obama Non-Recovery

The Reasons Behind the Obama Non-Recovery. Robert Barro, September 20, 2016, Opinion, “The Obama administration and some economists argue that the recovery since the Great Recession ended in 2009 has been unusually weak because of the recession’s severity and the fact that it was accompanied by a major financial crisis. Yet in a recent study of economic downturns in the U.S. and elsewhere since 1870, economist Tao Jin and I found that historically the opposite has been true. Empirically, the growth rate during a recovery relates positively to the magnitude of decline during the downturn.Link

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Have big banks gotten safer?

Have big banks gotten safer? Lawrence Summers, September 15, 2016, Paper, “Since the financial crisis, there have been major changes in the regulation of large financial institutions directed at reducing their risk. Measures of regulatory capital have substantially increased; leverage ratios have been reduced; and stress testing has sought to further assure safety by raising levels of capital and reducing risk taking. Standard financial theories would predict that such changes would lead to substantial declines in financial market measures of risk. For major institutions in the United States and around the world and midsized institutions in the United States, we test this proposition using information on stock price volatility, option-based estimates of future volatility, beta, credit default swaps, earnings-price ratios, and preferred stock yields.Link

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The Fed thinks it can fight the next recession. It shouldn’t be so sure.

The Fed thinks it can fight the next recession. It shouldn’t be so sure. Lawrence Summers, September 8, 2016, Opinion, “As I argued in the first blog post in this series last week, I was disappointed in what came out of The Federal Reserve’s annual conference in Jackson Hole, Wyo., for three reasons. The first reason, as I wrote in that post, was that the Federal Reserve should have signaled a desire to exceed its 2 percent inflation target during periods of protracted recovery and low unemployment, and in this context to signal that a rate increase was off the table for September and quite likely the rest of the year. Friday’s employment report further strengthens the case for delay both by adding to the evidence on the absence of inflation pressures and by suggesting a less robust economy than most expected.Link

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