Dean Baker's Blog, page 359

Teaching Economics to the Post on JP Morgan

The Washington Post continues to be very upset that the government is spending time going after Wall Street banks. Its editorial today complained again about the Justice Department's lawsuit against JP Morgan.

Among other things, the piece complained that the homeowners who benefit from write-downs of mortgages ($4 billion of the $13 billion settlement) were not the victims of the bank's misrepresentations of mortgages sold in mortgage backed securities. It also argued that these write-downs...

The Constitutional Issue With Detroit Pensions Shouldn't Be a Joke

The coverage of the legal battles surrounding how Detroit's pensions would be treated in bankruptcy have generally treated the guarantee of public employee pensions in the Michigan state constitution as somewhat of a joke that needs to be cast aside given Detroit's dire circumstances. The basis for the humor is less than obvious.

When the state of Michigan put a guarantee into its constitution it was presumably sending a message to both its public sector workers and its potential creditors. T...

Drug Patents Are Protectionism, Why Does the NYT Feel the Need for Quotes?

Trade policy is perhaps the most Orwellian area of U.S. politics today. Most formal trade barriers in the form of tariffs or quotas have been eliminated. What usually occupies the time of trade negotiators now is the crafting of regulatory rules dealing with health and safety issues, the environment, and other areas having little direct relationship to trade. Since the parties at the table generally reflect corporate interests, the strategy is to use "trade" agreements to put in place rules t...

The Slowdown in the Housing Market is a Good Thing

Much recent housing data suggest that the jump in mortgage interest rates following Ben Bernanke's taper talk in June had the effect of curbing demand in the market. This slowing is generally viewed as unfortunate in reporting on the economy, as in this Post piece. In fact, house prices were growing at an unsustainable rate, with the nationwide rate of growth in double digits and many markets seeing annual increases of 20-30 percent.

If this pace of growth had continued for much longer, it wo...

Strong Recoveries Ain't What They Used to Be: The Case of the U.K. and Simon Nixon

Simon Nixon appears nearly ecstatic over the what he terms the "strong recovery" in the United Kingdom.The problem is his notion of strong recovery doesn't fit the usual definition of the term.

According to the new upgraded growth projections from the I.M.F., which he highlights, the U.K. is projected to see 1.6 percent year over year growth in 2013. That would leave per capita income in 2013 about 6.0 percent below its 2007 level. The new upgraded projections show per capita income in the UK...

Can Greenspan Be Retroactively Impeached As Fed Chair?

That's what readers of this AP interview with Greenspan must be asking. Greenspan was asked about the crisis caused by the collapse of the housing bubble (inaccurately referred to in the interview as the "financial crisis). He responded by saying:

"A: The problem is that we didn't know about it [the growth of the subprime market]. It was a big surprise to me how big the subprime market had gotten by 2005. I was told very little of the problems were under Fed supervision. But still, if we had...

NPR Expert Tells Listeners that Republican Controlled States May Keep Residents from Getting Insurance

That was the implication of a claim by Bob Laszewski, a health policy analyst, interviewed on Morning Edition. Laszewski told listeners that the problems with the mechanics of the exchanges could be a problem for insurers:

"They're very worried about only sick people showing up for coverage, because only sick people are willing to go through the gauntlet."

If it turns out that the exchanges in the states run by the federal government turn out to produce such a serious skewing of applicants th...

U.K.-Canada Trade Deal to Increase U.K. GDP by 0.08 Percent

That's what David Cameron claimed according to the New York Times. Of course he didn't describe the gains as 0.08 percent of GDP, he referred to the gains as 1.3 billion pounds, which probably sounds like a bigger deal to most people. People in the UK will also have to wait to see this dividend, since trade deals are typically phased in over a number of years. The full effect may not be seen for ten years or more.

Problems With Signing Up for Obamacare Was a State Choice

Both the Post and the NYT have front page articles on the problems in the computer system that allows people to sign up for health care insurance through the federal exchange. It is worth noting that 14 states, including large ones like New York and California, have state run exchanges which have worked relatively well. The fact that people in other states are having difficulty signing up for insurance is the result of the decision of political leaders in those states not to establish their o...

Post Granny Bashers Are Whining for J.P. Morgan

You've got to love those Washington Post folks. They continuously use both their news and editorial sections to push for cuts to Social Security, Medicare, and disability insurance, running roughshod over journalistic standards and data. But when it comes to the Wall Street boys, they just can't help but to tear at our heart strings.

Last week the Post ran an editorial bemoaning the "political persecution" of J.P. Morgan. It complained that the government was pursuing a civil case against J.P...