Tag Archives: Most Recent Stories

Here’s an interesting post from John Cochrane on “narrow banking”. Narrow banking is the idea that we could create banks that take a “narrow” type of risk by investing only in very high quality assets like Central Bank reserves or government bonds. This would back the bank’s balance sheet with virtually risk free assets. The argument is that this would be ideal compared to modern banks because there would be no risk of runs and no need for bailouts. As the Cochrane post discusses, the...

A little over 10 years ago I sent out a research note to my clients saying that the financial crisis was entering a new stage and that policymakers were behind the curve. I remember becoming bearish when the yield curve inverted in 2006 and becoming worried that it was a sign of strain in the banking system as it always had in the past. I’d long been bearish on housing, but the way the crisis evolved and spread through the financial system took me by surprise. Still, I was well versed in...

Here are some things I think I have an opinion about: 1) Fat Shaming Works for Me. I liked this thoughtful Tweet by Dr. Mike Simpson: I do not condone body shaming. But, as a physician, I also cannot condone people pretending that obesity is healthy. Beauty may be skin deep, but fat deposits go all the way to your internal organs. Be healthy, live well! pic.twitter.com/PJ4dN0E83g — Mike Simpson, M.D. (@DrMikeSimpson) August 30, 2018 I’ve talked quite a bit about the economic and health...

Is it just me or does it seem like our politics are becoming increasingly polarized? The rise of the Tea Party, the Alt-Right, Donald Trump, Antifa, Bernie Sanders and the Social Democrats are all extremist responses to what seems like a world that has left many people behind. There are several reasons for this and I believe it will only get worse. This is the most important chart in all of economics and politics: Any layperson can understand this chart and so some version of this chart...

Here’s a whopper of an article: So. Much. Hyperbole. The basic gist of the article is that the US economy is struggling because of inequality, unstable employment and sagging productivity. And if we eliminate stock buybacks then all will be right in the world. This is misleading at best and very wrong at worst. First, there’s this assumption that the economy needs to be “saved”. As if the US economy is on the brink of death with its record setting GDP and low unemployment. I fully admit...

Donald Trump says the stock market will crash if he is impeached: “I’ll tell you what, if I ever got impeached, I think the market would crash,”¹ Now, I don’t have any superpowers, but if there’s one thing I am really good at it’s avoiding political bias in my analysis. I always try to start with objective and empirical truths when analyzing something. So, let’s see if we can navigate this political minefield and parse this thing out from the ground up. First, it’s important to understand...

I recall watching a baseball game earlier this year in which the announcer said that Juan Soto of the Washington Nationals was the youngest player ever to hit a home run at a particular baseball field. I thought to myself: “wow, what an achievement. No, wait a minute, that’s a totally irrelevant stat.” Lots of people had hit home runs at that baseball field. And lots of people had hit home runs at a younger age. The fact that Soto hit a home run at that park at that particular age had no...

I’ve been thinking about whether or not to write something about the crisis unfolding in Turkey, but there are much smarter people out there doing the legwork for me. Chief amongst them is Brad Setser at CFR. This post of his is tremendously good. It might get a little confusing for some so here’s a totally inadequate summary of what’s happening: Turkey wanted to spark growth and liberalized bank lending rules. Banks and local businesses borrowed a lot of foreign denominated debt. A boom...

In 1818 William Cubitt invented a machine called a “discipline mill”. The machine was a wooden wheel with treads that that was used to punish British prisoners. The wheel was later adapted to crush grains and took the name “treadmill”. If you’ve ever gone for a run on a modern version of one of these machines you might be all too familiar with that feeling of being tortured. Now, I try to avoid treadmills, but I do torture myself by running outside quite a bit. And since I run like an...

Here are some things I think I am thinking about: 1) Shrinkage in the markets!  There has been a lot of chatter lately about the shrinking of the public markets. This NY Times piece says the shrinkage is a problem for everyone. It cites this excellent NBER piece by people much smarter than me. Long story short, there used to be 8,000+ public firms and now there are just 4,000+ and so the world is about to go kaboom (or something like that). It’s true, No one likes shrinkage. But shrinkage...