Puncturing the Housing Optimism Bubble

By: Tuesday October 16, 2012 10:06 am

The housing bulls have really started to run wild now. One of them planted this rose-colored story in Bloomberg arguing that consumer deleveraging points to happy times ahead for the economy. The only problem is that the deleveraging comes from defaults rather than any paying down of debts. And these defaults are destructive for an [...]

Housing Has “Turned the Corner” – For Banks

By: Friday October 12, 2012 7:45 am

JPMorgan Chase, feeling little ill effects from the federal attempts at investigation of their business practices, announced a major earnings jump of 34%. Part of this comes from the fact that the previous earnings report included most of the losses from the Fail Whale trades (which have increased to $6.25 billion, as per this earnings [...]

Total US Debt at a Six-Year Low

By: Wednesday October 10, 2012 7:05 am

When politicians and partisans talk about “the debt,” they are almost always talking about publicly held debt, the balance sheet of the US government. Yet overall debt includes a number of elements. You have state and local government debt, corporate debt, and individual private debt plays a role as well. Household balance sheets are just [...]

IMF: Principal Reductions Now!

By: Wednesday July 4, 2012 6:51 am

The International Monetary Fund has explicitly called for principal reductions for underwater borrowers to deleverage individual balance sheets and jumpstart a soft recovery. An endorsement of principal reductions at such an establishment level could remove some of the stigma, and force a deeper reckoning over the need for them. And the IMF goes further, stating [...]

Examining the Payroll Tax Cut, Tax-Side Stimulus, and Social Security

By: Monday September 12, 2011 1:20 pm

Democrats in Congress are basically supportive of the American Jobs Act. So it’s curious that so many of them are actually opposed to its biggest piece: the expansion of the payroll tax cut into 2012 at a higher level. House Minority Leader Nancy Pelosi (D-Calif.) on Friday backed President Obama‚Äôs plan to extend and expand [...]

Fiscal Policy Must Remain Strong in a Debt Deleveraging World

By: Friday July 15, 2011 12:07 pm

Some members of the commentariat have just figured out the uniqueness of this recession, characterized by a real crisis in individual balance sheets. They’re a few years late, but if the analysis is right, welcome to the major problem going on right now. Balance sheet recessions are difficult, because consumers who we need to spend [...]

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