Rethinking the Economy

It’s the holiday season, so if you’re on Wall Street you’re probably asking yourself, is there any way I can repay taxpayers for saving my ass and helping me earn big fat, record-breaking bonuses this year? Turns out there is — finding new ways to hose taxpayers.
I don’t mean Wall Street finding new ways to [...]

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The Urban land Institute’s got a smart idea about how to get more bang out of federal transportation bucks: ‘Channeling Funding Through “the Three Bs”’ of Base, Bonus, and Bank.
1) Use Base Formula Funds to Maintain the System
Base formula funds should be the primary funding source for system maintenance and preservation. [...]

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How’s the Wall Street bailout going? If you’re on Wall Street, it’s going really well. For the rest of us? Here’s the assessment of Neil Barofsky, the special inspector general managing the Troubled Asset Relief Program:
“These banks that were too big to fail are now bigger,” Barofsky said. “Government has sponsored and supported several [...]

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One last point from Cassidy’s article. Any time we start talking about regulating finance, Wall Street says, your rules will stifle our innovation! Cassidy’s reply:
That’s precisely the point. “The goal is not to have the most advanced financial system, but a financial system that is reasonably advanced but robust,” Viral V. Acharya and Matthew [...]

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A great piece by John Cassidy in the New Yorker on one major reason why Wall Street crashed.
According to a common narrative, we have lived through a textbook instance of the madness of crowds. If this were all there was to it, we could rest more comfortably: greed can be controlled, with some [...]

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What happens when an economic model can’t straightforwardly deal with the role of power in the economy? You get bizarre ideas like the one presented in the New York Times.
Gretchen Morgenson, one of the smartest business writers around, asks what we’re going to do about the financial regulators who completely failed us.
Even though calamitous [...]

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William Greider’s promoting an interesting idea about how to radically restructure the Federal Reserve. The crux of his idea comes from one of the least understood powers of the Federal reserve: it can essentially create money.
During the past year, the Fed has flooded the streets with money–distributing trillions of dollars to banks, financial [...]

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Every once in a while I come across a stat that blows me away. I write it down on a scrap of paper, and I can’t find it again. So, since this blog is essentially a public journal, I’m going to start storing them here.
One of the reasons why the financial system can cause so [...]

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Krugman nicely sums up a big problem with the incentives players have in the financial ecosystem:
The huge bonuses Goldman will soon hand out show that financial-industry highfliers are still operating under a system of heads they win, tails other people lose. If you’re a banker, and you generate big short-term profits, you get lavishly rewarded [...]

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We need to remove from the investment banking and the commercial banking industries a lot of the practices and prerogatives that they have so lovingly possessed. If they are too big to fail, they are too big to be allowed to be as gamey and venal as they’ve been — and as stupid as they’ve [...]

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