Confusing “Us” and “Them” Today’s Wall Street Journal is running a house editorial decrying government wage controls on the top 175 executives at seven companies that are still using money from the Troubled Asset Relief Program (“TARP”). The title of the piece? “Our New Paymasters: wage controls are politically easier than genuine reforms.” I can...Read More
A *Macroeconomic Overview Back in April, I ran a post called “Real Estate & Inflation” that isolated wage growth as the key to whether any inflationary outbreak would help or hurt real estate (incidentally, that post is now ranked 18th in the world, according to Google). Specifically, if inflation spilled over into workers’ wages, it...Read More
The Fed’s “Mortgage Shopping Spree” Drowned out in all the health care reform discussion is a quiet — but big — drop in mortgage rates. As of this morning, rates on 30-year mortgages are being quoted at 5%. That’s a big improvement over just six weeks ago, when rates were in the mid-5’s — and...Read More
Pick Your (Economic) Metaphor The real question is, now what? Government interventions are only meant to light a fire under the real economy and unleash what John Maynard Keynes called our “animal spirits.” But government dollars can’t sustain growth. Like it or not, the stock market is bigger than the Federal Reserve and the U.S....Read More
Hen House Preservation Principles “Goldman to make record bonus payout.”–headline, guardian.co.uk (6/21/09) Principle #1: When presented with overwhelming evidence that the foxes have taken over the hen house . . . stop adding chickens! Principle #2: It’s not hard to figure out — at least in the short run — which foxes stole the most...Read More
Breached Levee’s & Underwater Mortgages If the housing bust and resulting recession are the equivalent of an economic hurricane (albeit a man-made one), what were the levees designed to hold back the flood waters? Certainly, the major ones were: –the role played — or not played — by the credit rating agencies, which blatantly mis-rated...Read More
