Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.
- Mexico to Grow at a Slower Pace than Expected this Year (Lindsey Taylor, FX Empire) Mexico slashed its growth forecast for this year to 2.7%, down sharply from the previous projection of 3.9%, after its economy grew at a slower pace than expected in the first quarter due to a tax hike that weighed on consumer demand and weaker export growth. The 1Q 2014 GDP growth estimate came in at 1.8%, up from an even lower 0.7% in 4Q 2013. All rates are year-over-year.
The Chart of the Week
Attempts at regulating the TBTF (too big to fail) banks have seen the assets of those institutions rise dramatically. The five largest banks held 28% of U.S. bank deposits in 2000; today they have almost half (47%). This week I discuss the problem and the solution.
Video discussing this graph after the Read more >> jump.
May 24th, 2014
from the Philadelphia Fed
Some economists have noted that recessions accompanied by banking crises tend to be deeper and more difficult to recover from than other recessions - even those associated with other types of financial crises. For instance, the bursting of the dot.com bubble in 2001 was a very important financial event that was not accompanied by a protracted recession. The potential of banking crises to do lasting economic harm led policymakers to adopt safeguards in the 1930s that have essentially eliminated traditional banking panics in the U.S.
from the Congressional Budget Office (CBO)
CBO has estimated the budgetary costs of the Department of Education’s student loan programs, the Export-Import Bank’s (Ex-Im Bank’s) credit programs, and the Federal Housing Administration’s (FHA’s) single-family mortgage guarantee program using two different approaches. In one, cost is based on an estimate of the market value of the federal government’s obligations, termed a fair-value approach. Those estimates are compared with ones reflecting the procedures currently used in the federal budget as prescribed by the Federal Credit Reform Act of 1990 (FCRA). CBO’s fair-value and FCRA estimates are based on the program terms and outcomes—including the volume and amount of lending, fees, and borrowers’ rates of repayment and default—that are expected to prevail under current law.