Begin with Robert Samuelson's diagnosis as to why nearly all America's 13,000 economists missed the financial meltdown: (1) few economists study the arcana of financial markets; (2) few economists study inelegant history, instead taking intellectual refuge in elegant mathematical models. Financial journalist Michael Lewis profiles an AIG exec who played a central role in the financial crash.
A Wall Street Journal editorial looks at the unemployment numbers released last Thursday, and sees an unlovely picture. The New York Times reports that oil price volatility imperils recovery. "Black Swan" author Naim Nicholas Taleb sees a depression underway. In a June 30 speech Janet Yellen, President & CEO of the Federal Reserve Bank of San Francisco, sees a long period with stagnant economic growth.
An economics professor looks at mortgage evidence and blames foreclosures, not subprime, for the housing meltdown. Robert Laubach, senior economist at the Federal Reserve, anticipated in a 2003 paper, New Evidence on the Interest Rate Effects of Deficits and Debt (21 pages), the debt bomb America now faces.
Bottom Line. "Grren shoots," meet "Rosy Scenario," and have a lovely day.
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