What has Bank Capital ever Done for Us?

by Voxeu.org

-- this post authored by Oscar Jorda, Bjorn Richter, Moritz Schularick, and Alan Taylor

Higher capital ratios are unlikely to prevent a financial crisis. This is empirically true both for the entire history of advanced economies from 1870 to 2013 and for the post-WW2 period, and holds both within and between countries. The authors of this column reach this conclusion using newly collected data on the liability side of banks’ balance sheets in 17 countries. However, higher capital buffers have social benefits in terms of macro-stability: recoveries from financial crisis recessions are much quicker with higher bank capital.

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Was Marx Right?

April 29th, 2017
in history, macroeconomics

by Philip Pilkington

Well, it looks like The New York Times has opened a bit of a can of worms by asking Was Marx Right?. I generally find that this question to be a bit annoying. Was Marx right about what, specifically? That labour is the True and Only source of value? No, he was wrong on that. That communism was an inevitable outgrowth of capitalism? He’s been wrong on that — so far, at least. That capitalism was prone to financial crises? Yes, he was quite right about that.

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Angst in America, Part 5: The Crisis We Can’t Muddle Through

April 28th, 2017
in macroeconomics

by John Mauldin, Thoughts from the Frontline

“The ship of democracy, which has weathered all storms, may sink through the mutiny of those on board.”– Grover Cleveland, the 22nd and 24th president of the United States

“It is your concern when your neighbor’s wall is on fire.”– Horace

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Trade and Increased Commercial Investment Saved Q1 2017 GDP from Contraction

April 28th, 2017
in aa syndication, gdp

April 28, 2017 - BEA Estimates 1st Quarter 2017 GDP Growth At 0.69%:

by Rick Davis, Consumer Metrics Institute

In their first (preliminary) estimate of the US GDP for the first quarter of 2017, the Bureau of Economic Analysis (BEA) reported that the US economy was growing at a +0.69% annual rate, down roughly two thirds (-1.39%) from the +2.08% reported for the prior quarter.

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Angst in America, Part 4: Disappearing Pensions

April 26th, 2017
in macroeconomics

by John Mauldin, Thoughts from the Frontline

“Companies are doing everything they can to get rid of pension plans, and they will succeed.”– Ben Stein

“Lady Madonna, children at your feet
Wonder how you manage to make ends meet
Who finds the money when you pay the rent?
Did you think that money was heaven sent?” -– “Lady Madonna,” The Beatles

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