Goldilocks, the Crash, and the Perfect Fiscal Storm

Randall Wray revisits the Clintonian Goldilocks economy to find the seeds of the Global Financial Crisis, using the sectoral balance approach

What has led Ireland to the brink of collapse?

A comprehensive outline of the Irish situation and with a retrospective on the steps leading us to the brink

Iceland: Welcome back to the 1950s

The global crisis has brought many countries to their knees, none more so than the small island of Iceland whose losses amount to seven times its GDP. Yet while Iceland’s recovery has in many ways been remarkable, this column argues that the country’s capital controls stand in the way of further progress

Crisis is Not Behind Us

Wray’s view: Banks are bigger than before the crisis. But, despite their books showing profits, it is not clear if they are adequately reserving for loans and liabilities already on their balance sheets. The right approach is to actually enforce industry regulation while increasing purchasing power and jobs to avoid a bigger crash down the line

Gundlach on another crisis: “How much currency do you have?”

Forget about gold for the time being. Investors need to own cash – currency, simply as a hedge against the risk of another derivatives mess down the line

‘Too Big To Fail’ in 80 seconds

Apparently, the upcoming film on the credit crisis ‘Too Big To Fail’ can be boiled down in these 80 seconds of preview clips.

Enjoy.

Is it time for the US to disengage the world from the dollar?

Michael Pettis argues that Reserve currency status is a global public good that comes with a cost, and people often forget that cost

Why markets fail

George Soros makes the case for economics as a social science using his theory of reflexivity. Here are some additional thoughts to help understand why markets fail

Steve Waldman on the futility of blogging and the monopoly of lobbyists in policy making

This is really motivated by being incredibly frustrated with what happened a couple of years ago. Obviously there was a financial crisis; that’s not what frustrated me. I am one of the naysayers who was not at all surprised there was a financial crisis. I was expecting such a thing. What I was not expecting

“The Fed lent freely, but at a low rate, on dodgy collateral”

In September 2008, the Federal Reserve let banks turn more than $118 billion in junk bonds, defaulted debt, and other securities into cash.

The role of a central bank in a crisis is to act as a lender of last resort by helping market participants discriminate between the truly insolvent and the unfortunate illiquid. If the Central Bank lends against good assets at a penalty rate, the truly insolvent financial institution goes bust but the unfortunate illiquid institution gets bailed out. I have been making this point for quite some time

They Missed the Money

Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession  (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market"(Aucontrarian.com, 2009) The Federal Crisis Inquiry Commission (FCIC) had as much chance of satisfying the public as the Warren

Debt Defaults, Austerity, and Death of the “Social Europe” Model

By Jeffrey Somers and Michael Hudson A spectre is haunting Europe: the illusion that Latvia’s financial and fiscal austerity is a model for other countries to emulate. Bankers and the financial press are asking governments from Greece to Ireland and now Spain as well: “Why can’t you be like Latvia and sacrifice your economy to