Jan 23, 2008: Ben Bernanke is spooked. That's one explanation for the Federal Reserve chairman's decision to lead the Open Market Committee in yesterday's unprecedented 75-basis- point cut in the fed funds rate.... He and his allies note, in defense of their move, that long-term interest rates aren't high and, indeed, have generally headed down this month. That suggests that investors don't fear inflation. Still, if you look at some of the other standard measures, you don't see deflation or disinflation, or anything else that starts with D.'' You see anI'' -- inflation.... [T]he 1930s comparison isn't the only relevant one.... The argument for the '71 analogy is strong. In the summer of 1971, unemployment was in the high 5s and low 6s, something like today....
Today, Senator Hillary Clinton, or George W. Bush's administration for that matter, can talk about how
the middle class is stalled,'' and express concern for those seeking homes. Butstalled'' only describes a small group. Half a year into the credit crisis, a good share of Americans are still customizing their mortgages, like someone placing a latte order at Starbucks.Stalled'' isn't something we have experienced.Stalled'' is what heads of households were in January 1982, when they went into a bank and learned the fixed rate for a 30- year mortgage was about 17.5 percent....
So our national problem may be that we remember the 1970s too little and the Depression too well...
Jul 12, 2008: Phil Gramm faces political exile because he made the mistake of telling the truth.... Gramm said that the country was not in a true recession but a "mental recession." He also said, "We have sort of become a nation of whiners" and "You just hear this constant whining, complaining about a loss of competitiveness, America in decline." Gramm was right about the recession....
Gramm's second sin was political. Calling voters whiners is to shame them... shaming voters is something American politicians simply don't do.... The view among the nation's political advisers, from far left to far right, is that the economy is in a Katrina. Anyone who disagrees has no role in the 2008 presidential contest....
Campaign Econ has costs. The first is that talk of a downturn -- or "mental recession," as Gramm put -- can itself generate a downturn.... Grumbling leads to costly government rescues that scare markets and slow growth....
The way to strengthen the economy right now is to elect leaders who dare to talk about problems in precise and even technical terms -- and then act on them. McCain has that capacity, but only if he can transcend Campaign Econ...
Aug 14, 2002: [O]ne reason houses are more popular as wealth receptacles is because houses have become a bit more like gold... mortgages are securitized and there is a national housing market (www.realtor.com). Second mortgages... can and do unlock the value in their homes.... In other words, houses have come somewhat closer to being a liquid commodity.... There is also the emotional factor: A house is inherently more lovable an object than cold metal or a stock certificate and so it is harder to part with. This means that the housing market cannot be as volatile as the others. In other words, while house prices may sag and sag, they will not pop...
Comments