Negative Interest Rates:
Greg Mankiw: http://gregmankiw.blogspot.com/2009/04/observations-on-negative-interest-rates.html
Scott Sumner: http://blogsandwikis.bentley.edu/themoneyillusion/?p=1032
Willem Buiter: http://blogs.ft.com/maverecon/2009/05/negative-interest-rates-when-are-they-coming-to-a-central-bank-near-you/
“…the ear not only senses sound but also makes noises of its own, albeit at a level only detectable by supersensitive microphones. / If those noises prove unique to each individual, it could boost the security of call-centre and telephone-banking transactions and reduce the need for people to remember numerous identification codes.”
Dark Valley: Excerpts from Steinbeck’s “A Primer on the ’30s”.
Hong Kong & the Welfare State:
Chinese Brown Shoots: How China may be buying short-term prosperity at the cost of medium-term damage to its financial system.
Immigration & Humanitarianism
Unsurprising. Of course, if one gives non-trivial weight to the interests of immigrants, then restrictions on immigration become morally unjustifiable. This is why I tend to only consider the interests of the US & its citizens when evaluating policy….
CDS & Bankruptcy:
- Minimizing BK costs may not be possible. How does one do this? Perhaps one could write bond contracts to permit automatic DFE swaps under certain circumstances; but a) those circumstances would have to be defined w/ sufficient clarity to enable bondholders to easily determine when the DFE clause applies; and b) the increased risk introduced by such a clause would tend to increase funding costs correspondingly.
- Salmon’s objection to McArdle’s notion of giving CDS issuers a seat at BK negotiations wouldn’t apply if we a) required CDS buyers to have an insurable interest; & b) prohibited CDS buyers from buying a face value of CDS exceeding the face value of their position.
- Another possibility may be to simply mandate, by law, that a) a restructuring and a BK are both covered as “credit events” by all CDS, and b) the payout for either would be the same. This would largely neutralize the problem since, in this case, a bondholder gets a payout either way, but – since they’d still be holding the bonds in question – would still have an incentive to favor any restructuring that maximized the return on those bonds.
Quiet Sun: “The Sun is the dimmest it has been in a century”.
FC & Tax Liens: Fascinating – takes FC’s role in promoting market clearing & housing deflation to a whole new level. Could also help eliminate shadow inventory, since tax lien holders would have far less incentive to sit on REO in hopes of improved prices. Only downside is differences in state laws. If only every state treated tax liens as favorably as MD….
Voluntary DFE Swap:
Recovery From the Great Depression: Apparently monetary stimulus played a big role. Fiscal stimulus…not so much.
Housing Crash: If foreclosure auctions are any guide, expect housing prices to continue falling.
Quality Immigration: An H-1B surplus. Unsurprising given high & rising unemployment….
Torture Memos Disclosure & CIA Morale:
Not sure what I think of this.
Reforming Affirmative Action:
Postmodern Dating, Nerdy Nice Guy Edition
Sleep Deprivation & Physiology
More Negative Interest Rates: Buiter’s second option (currency taxation) would also seems executable via indirect means, namely, inflation generated by running the printing press. Print up enough currency, and you’ll eventually exceed consumer demand for it – at which point, the value of currency would fall.