Dean Baker's Blog, page 569

Ezra Klein: Out of the Ballpark on Inside Job

I always enjoy reading Ezra Klein's blog. He's an excellent writer and he does his homework. However, he really missed the story in his review of Inside Job  (even though I do appreciate the favorable mention).

Ezra criticizes the movie for making the story one of corrupt economists blessing the evil doers of Wall Street:

"What's remarkable about the financial crisis isn't just how many people got it wrong, but how many people who got it wrong had an incentive to get it right. Journalists...

Is Anyone Ever Going to Tell the Washington Post About the Housing Bubble?

It must be very hard to get information over at Fox on 15th Street. They still do not seem to have heard of the housing bubble. The Post noted the weak sales in existing homes for May reported yesterday, as well as the drop in prices, and told readers:

"The housing market is still struggling to recover from a historic slump, according to industry data released Tuesday."

Of course it is not struggling to recover from a historic slump. It is correcting an unprecedented bubble. There run-up in n...

Tell NPR, the Fed Has Many More Bullets

In its top of the hour news segment NPR told listeners that there is little else that the Fed can do to boost the economy. This is very seriously wrong.

The Fed could do more quantitative easing, it could target a long-term interest rate, for example targeting a 2.5 percent 10-year government bond rate, or it could target a higher inflation rate (e.g. 3-4 percent). All of these measures would some impact in boosting the economy.

The Fed is choosing not to go this route because its open...

The Problem of Deflation at the NYT

In discussing the Fed's QE2 program, the NYT tells us that things are much different today than they were a year ago.

"Last year prices were falling; this year, prices are increasing."

Well, sort of. Here's the overall CPI where there is in fact a small drop between April and June, although it is completely reversed by the July increase.

Source: Bureau of Labor Statistics.

Of course, if we look at the core CPI which the Fed targets, there is no decline in prices at all in the summer of...

Blognote in Honor of Thomas Friedman: Spending on the Commerce Department Is Going to Bankrupt the Country

The United States has to cut back spending on the Commerce Department or it will bankrupt the country. Okay, I have no evidence for this and it really doesn't make any sense. The Commerce Department's budget is about $10 billion a year, less than 0.3 percent of total spending, but this note is written in the spirit of Thomas Friedman.

Just as Thomas Friedman can tell readers that Social Security and Medicare are bankrupting the country with no evidence, in my blognote I get to blame the...

WSJ Gets Caught Up In the Chicken and Egg of Housing Finance

The WSJ told readers:

"because the banking sector isn't large enough to hold more mortgages without expanding its deposit base, securitization markets are an integral part of any lending expansion."

The problem with this assertion is that one of the main reasons that the banking sector doesn't have a larger deposit base is that investors can buy government insured mortgage backed securities. If the government reduces or eliminates its role in this market, then investors will have to look for ...

The Washington Post Tells Readers that the Financial Markets Are Wrong

The people who are betting trillions of dollars in financial markets have considerable confidence in the ability of the U.S. government to pays its debts, as demonstrated by the fact that the interest rate on 10-year Treasury bonds remain extraordinarily low. However a front page Washington Post article told readers that these actors are mistaken, actually the United States is, "a nation already mired in red ink."

Most newspapers would restrict such sweeping and unsupported assertions to the ...

Did Dana Milbank's Mother Tell Him "There's Not Much More That Government Can Do to Boost Jobs in the Short Term?"

That's what Washington Post readers must have been thinking when they saw Milbank's line:

"The truth is that there's not much more that government can do to boost jobs in the short term."

Since this is so obviously counter-factual and there is nothing in the article to support the statement, one must assume that this is the sort of truth that gets passed on in the family that is never supposed to be subjected to critical evaluation. Of course as a practical matter, there is an enormous...

When Did the IMF Learn About the Economy?

When Did the IMF Learn About the Economy?
Dean BakerThe Guardian Unlimited, June 20, 2011

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The Endgame on the Debt Ceiling

The Endgame on the Debt Ceiling
Dean BakerTruthout, June 20, 2011

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