November 25

“What you need to know to navigate today’s economic debate.”

Reform of the OTC Derivative Market (Liu)
Economist Henry Liu explains the folly of deregulation and discusses what is necessary to reform the financial system.

What If the Government Just Prints Money? (KansasEcon)
Economist Scott Fullwiler argues, that given a certain budget deficient, bond sales can actually be more inflationary than just printing money.

Telling the Narrative of the Financial Crisis: Not Just a Housing Bubble (Brookings)
New report outlines three major narratives about the financial crisis still vying for acceptance by the public and that whichever one comes to dominate could strongly affect public policy.

2.8% drop in lending is largest since 1984 (NYT)
Lending by U.S. banks plunged by 2.8 percent in the third quarter, the largest drop since at least 1984 and the fifth consecutive quarter in which banks have reduced lending.

Fed Sees Risks in Low Rates Policy (FT)
Officials warn of ‘excessive risk-taking in financial markets’.

Fear Pushes US Rates into Negative (FT)
Investors forgo interest income in name of security.

Congress’ Next Trick: Pull jobs Out of a Hat (CNN)
Lawmakers are on the hot seat to spur job growth. There’s no consensus yet on the best strategy, in part because all the options have downsides.

U.S. Looks to Australia on Credit Card Fees (NYT)
After a law forced a cut in transaction fees, some merchants and banks added new charges for customers that were, sometimes, higher than the old ones.

Economy Limps Back to Strength (WP)
Fed says a “slow-motion recovery” with high unemployment will deter a return to normal.

Recovery Takes an Unclear Path (FT)
The economic crisis brought jarring shifts that have moderated domestic and global imbalances but it is not clear how far adjustments have yet to go

Home Prices May Be Nearing a New Dip (NYT)
The modest recovery in home prices is beginning to falter, according to the Standard & Poor’s/Case-Shiller home price index.

AIG Board OKs CEO Pay, as Benmosche Agrees to Stay (Reuters)
AIG, the insurer that received billions of dollars in a U.S. bailout, has been authorized by its board to pay Chief Executive Robert Benmosche’s $7 million compensation, after it laid to rest concerns that he may quit the post.

China May Only `Fine Tune’ at Meeting to Set 2010 Policies, Economists Say (BLM)
China’s leaders may highlight inflation concerns at a meeting this month to set economic priorities for 2010 without changing existing fiscal and monetary policies