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BlogMore London Whale Postmortem
June 07, 2013 The US Senate investigation of JPMorgan Chase’s Chief Investment Office (CIO), and more specifically of the operations of its Synthetic Credit Portfolio (SCP) unit — otherwise known as the “London Whale” trades — concluded with the release of their full report in March. The report alleges that the CIO operated without a clear mandate and [...] Blog -
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QE vs the Recovery Act: How Does Our Approach to Stimulus Affect Inequality?
June 06, 2013 Annie Lowrey recently renewed the ongoing discussion over whether the Federal Reserve’s attempts at reviving the economy through quantitative easing (QE) are exacerbating inequality. The abbreviated version of the argument is that QE operates mainly through boosting asset prices, leading to gains in stocks and housing that largely benefit those at the top. If that’s [...] Blog -
One-Pager No. 38Χρηματοοικονομική μεταρρύθμιση και η «φάλαινα του Σίτι»
June 05, 2013 Η πρόσφατη έκθεση της μόνιμης υποεπιτροπής της αμερικανικής Γερουσίας για τις έρευνες σχετικά με τις δραστηριότητες της μονάδας Συνθετικού Χαρτοφυλακίου Πιστοδοτήσεων της JPMorgan Chase, που είναι επίσης γνωστή ως η...more Publication -
One-Pager No. 38
Financial Reform and the London Whale
June 05, 2013 The recent report by the Senate Permanent Subcommittee on Investigations on the operations of JPMorgan Chase’s Synthetic Credit Portfolio unit—aka the London Whale—has brought renewed attention to the risks of...more Publication -
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What Is “Time Poverty” and Why Should You Care?
June 05, 2013 This is how we came up with the official poverty line for the United States, back in the early 1960s: essentially, we put together a very basic diet, figured out the monetary value, and multiplied by three. If a family has less income than that number, adjusted for inflation, they’re poor. There are numerous problems [...] Blog -
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Minsky Abroad
June 03, 2013 Announcing two upcoming conferences, organized as part of the Levy Institute’s international research agenda and in conjunction with the Ford Foundation Project on Financial Instability, which draws on Hyman Minsky’s extensive work on financial governance, the structure of financial systems to ensure stability, and the role of government in achieving a growing and equitable economy: [...] Blog -
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New Frontiers in Financial Wrongdoing and Instability
May 30, 2013 Benjamin Lawsky is the very first Superintendent of the New York Department of Financial Services (DFS), a regulatory body created in 2011 through the merger of the New York State Banking and Insurance Departments. Lawsky spoke recently at the Levy Institute’s annual Minsky conference and he began with an appropriately Minskyan tune: There is a [...] Blog -
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The Role of the Fed in the Sustainability of the Long-term Budget
May 29, 2013 As noted, the Congressional Budget Office says that the federal deficit will shrink to 2.1 percent of GDP in two years and then start to grow again after 2015. The most important factor contributing to the widening budget deficit over the next 10 years, according to the CBO, is not Social Security, or even Medicare, [...] Blog -
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This Time Is Indifferent
May 24, 2013 Whether it’s the terrible growth numbers in the eurozone (Eurostat), the revelation of spreadsheet errors in everyone’s favorite debt disaster study (for some of the non-spreadsheet-based problems with the Reinhart-Rogoff approach, see this 2010 working paper), or the fact that the US federal deficit is on track to shrink to a measly 2.1 percent of [...] Blog -
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Working Paper Roundup
May 23, 2013 The Economic Crisis of 2008 and the Added Worker Effect in Transition Countries Tamar Khitarishvili Modeling the Housing Market in OECD Countries Philip Arestis and Ana Rosa González The Problem of Excess Reserves, Then and Now Walker F. Todd On the Franco-German Euro Contradiction and Ultimate Euro Battleground Jörg Bibow Currency Concerns under Uncertainty Sunanda [...] Blog -
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Safety Nets vs Economic Empowerment
May 21, 2013 There are important changes in how many developing countries are approaching the problem of poverty. Specifically in the area of “social protection” policy — policies intended to prevent or alleviate income insecurity and poverty — these changes are reflected in attempts to move beyond one-off interventions and “safety nets” to policies designed to address some [...] Blog -
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Hyman Minsky and the Employer of Last Resort
May 17, 2013 A couple of weeks ago, I mentioned Hyman Minsky’s new book, Ending Poverty: Jobs, Not Welfare (there is also a Kindle version). Take a look at the cover – Minsky looking like a bit of a rougue! I thought you might enjoy my powerpoint presentation, given at the Levy-Ford annual Minsky conference in NYC in mid-April. [...] Blog -
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Measuring Success in the Eurozone
May 16, 2013 The formation of the eurozone represents “the wildest experiment in financial history,” according to C. J. Polychroniou: the eurozone was to involve the inclusion of independent states, with highly diverse economic systems and cultural settings, that were required to give up national currency sovereignty in exchange for a “foreign” currency without the backing of a [...] Blog -
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A Budget Surplus by 2015?
May 15, 2013 That’s the implication of a James Pethokoukis post linked to here by Reihan Salam. Let’s assume for the sake argument that a federal budget surplus does emerge in 2015 (yesterday’s CBO report projected the 2015 deficit would be a mere 2.1% of GDP). Salam expresses concern that such a scenario would leave Republicans, who have [...] Blog -
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Deposit Insurance and Moral Hazard: Lessons from the Cyprus Crisis
May 15, 2013 In a new policy note, Jan Kregel draws out some of the policy lessons of the Cypriot deposit tax episode for plans to create a system of EU-wide deposit insurance. In addition to the necessity of a strong central bank (the ECB in this case) standing behind the deposit insurance scheme (which does not appear [...] Blog -
Working Paper No. 765The Economic Crisis of 2008 and the Added Worker Effect in Transition Countries
May 14, 2013 Following the financial crisis of 2008, transition countries—the economies of Central and Eastern Europe and the former Soviet Union—experienced an increase in female labor force participation rates and a decrease...more Publication -
Working Paper No. 764
Modeling the Housing Market in OECD Countries
May 10, 2013 Recent episodes of housing bubbles, which occurred in several economies after the burst of the United States housing market, suggest studying the evolution of housing prices from a global perspective....more Publication -
Dimitri B. Papadimitriou on Skai TV’s “Οι Νέες Φάκελοι”
May 10, 2013 In a live broadcast, Levy Institute President Dimitri B. Papadimitriou, Loukas Tsoukalis, Hellenic Foundation for European and Foreign Policy, and economist Aristos Doxiadis discuss the viability of Greece’s fiscal adjustment...more News -
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Kocherlakota on Low Interest Rates and Instability
May 07, 2013 Narayana Kocherlakota is the head of the Federal Reserve Bank of Minneapolis and is known for an uncommon feat in high-level policy circles: he changed his mind. Originally a monetary policy hawk, Kocherlakota has become a supporter of looser Fed policy. He spoke recently at the Levy Institute’s Minsky conference in New York, and some [...] Blog -
Policy Note No. 5The New Rome
May 07, 2013 The European Union (EU) is a treaty-based organization that was set up after World War II as a means of putting an end to a favorite practice of the Europeans:...more Publication -
Working Paper No. 763
The Problem of Excess Reserves, Then and Now
May 07, 2013 This working paper looks at excess reserves in historical context and analyzes whether they constitute a monetary policy problem for the Federal Reserve System (the “Fed”) or a potentially inflationary...more Publication -
Working Paper No. 763
Το πρόβλημα με τα πλεονάζοντα αποθεματικά στο παρελθόν και σήμερα
May 07, 2013 Η παρούσα εργασία εξετάζει από ιστορικό πλαίσιο τα πλεονάζοντα αποθεματικά και αναλύει αν αποτελούν πρόβλημα νομισματικής πολιτικής για την Ομοσπονδιακή Τράπεζα των ΗΠΑ (Fed) ή ένα ενδεχομένως πληθωριστικό πρόβλημα για...more Publication -
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No Euro Paradoxes Here, Just Plenty of Euro Folly
May 02, 2013 In economics, there is a remarkable “stickiness” in bad ideas and confusions. In fact, some bad ideas and confusions never seem to go away. For instance, last summer Martin Feldstein bravely suggested that euro weakening would help solve the euro crisis and rescue Europe (WSJ: “A weaker euro could rescue Europe”). Similarly, in a Bruegel [...] Blog