Friday, September 17, 2010

Today's Best Reads

1--Poverty Rate Rises To 14.3 Percent In 2009, Arthur Delaney, Huffington Post

2--Will Basel III’s Capital Requirements Make the Financial System Safer?, Mark Thoma, Moneywatch (Are we doomed? Yes)

3--The Tax Cut Racket, Paul Krugman, New York Times
Excerpt: "Almost everyone agrees that raising taxes on the middle class in the middle of an economic slump is a bad idea... So the G.O.P. is, in effect, threatening to plunge the U.S. economy back into recession unless Democrats pay up. What kind of political party would engage in that kind of brinksmanship?"

4--Some unsolicited advice for regulators, Economics of Contempt (Tip: "Put simply: You need to get in the banks’ face")

5--What America needs is a payroll tax cut, Nouriel Roubini, Washington Post
Excerpt: "Most policy approaches, including the Obama proposals, have tended to subsidize the demand for capital rather than the demand for labor. That has the problem backward. In the second quarter, capital spending reached an annual growth rate of 25 percent. The argument that increased demand for capital leads to greater demand for labor (i.e., if you buy more machines you need workers to run them) has not held up. Firms are investing in capital goods, equipment and offshore offices that allow them to produce the same amount of goods with less -- and lower labor costs. To avoid a chronic increase in the unemployment rate, we need to subsidize the demand for labor -- achieving job creation -- rather than making it cheaper to buy capital, as investment and other tax credits would do." Hooray for Roubini

6--Fiscal Policy Choices in Uncertain Times, CBO Director's Blog
Excerpt: "In summary, the economic recovery will probably proceed at a modest pace—leaving total output well below its sustainable level, and the unemployment rate well above its sustainable level, for a number of years. In CBO’s judgment, the available monetary and fiscal tools, if applied at sufficient scale, would improve economic conditions during the next few years—though with costs and risks in the medium and long term. Policymakers need to address those trade-offs."

7--Are banks really private enterprise? Yves Smith, naked capitalism
Excerpt: "We cannot assess the costs of regulation without recognising a few facts: first, both the economy and the financial system have just survived a near death experience; second, the costs of the crisis include millions of unemployed and tens of trillions of dollars in lost output, as the Bank of England’s Andy Haldane has argued; third, governments rescued the financial system by socialising its risks; finally, the financial industry is the only one with limitless access to the public purse and is, as a result, by far the most subsidised in the world."

8--Regulators to Target 'Window Dressing', Michael Rapoport, Wall Street Journal
Repo 105 redux--banks move leverage off their balance sheets before quarterly reports


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