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 (and sometimes longer ones) 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.
Congress and the public took Paulson and Bernanke at their word as far as their plans for how to use the $700 billion was concerned. But you could see their real intent from the terms of the TARP itself. They refused to brook anything other than token restrictions on how they used a taxpayer-funded lifeline to reward banks and their executives* for incompetence and looting.
Articles about conflicts and disease around the world
"For comparison, lets try this with another discipline.
Eminent doctor (Bernanke) determines that the patient's life-threatening condition is a result of low iron. He treats it with immediate transfusions, and a longer term regime of iron supplements. Despite being mugged (by a sequester) and losing a lot of blood, the patient (US economy) makes a slow recovery.
Welding contractor (Asness), who claims expertise in materials containing iron, proclaims the foolishness of this treatment, as he perceives a risk of iron overdose. He and his colleagues in the iron ore business suggest treating with leeches. Years later, a patient (Europe) treated with leeches remains hospitalized and in serious condition.
To add insult to injury, Asness admits that his treatment plan was wrong, but denies that the problem was low iron and claims that we won't know if Doctor Benanke's treatment worked until the patient comes off his supplements. Then he has the temerity to suggest that those doctors who supported Bernanke's plan were rude for telling him to go to medical school before trying to practice medicine.
Moral: The rich are different because they have more money, not because they have more intellect, more sense, or a better plan."
Unable to Meet the Deductible or the Doctor (Abby Goodnough and Robert Pear, The New York Times) There are certainly problems with high deductible policies but the lead case study in this article doesn't pass the smell test. A part time employee of a landscape company has a $6,000 deductible health policy? Why doesn't this low income individual have a government subsidy for that deductible? This situation was not properly explained in the article. (Other case studies mentioned don't raise such obvious questions.)
Why A Gold Standard Does Not Imply Price Stability (Jon Hartley, Forbes) The author uses inflation data from the Great Depression to support his hypothesis. Is his argument that strong when it encompasses a time period when the price of gold was so strongly manipulated? We should test the hypothesis over the previous 140 years, which also had times of leaving the gold standard and of currency value manipulation. As the climate change debaters might say, this is not settled science.
High-Speed Traders Put a Bit Too Much Gravy on Their Meat (Matt Levine, Bloomberg View) It happens again and again in our (not so) free market system. Once an entity has established some degree of control they start pumping up their profits. The high-speed guys establish that they have a market maker's role, they succeed in gaining self-regulation and then they ladle gravy with front loaders instead of serving spoons.
Falling Commodities Prices Pressures Central Banks (Jon Hilsenrath and Brian Blackstone, The Wall Street Journal) The threat of deflation was thought to be beaten in 2010 and 2011 but since 2011 things have been sliding back toward negative price growth in several areas. This is a big concern to central banks which are charged with supporting economic growth. If deflation becomes endemic then investment, which is required for growth will not be made because the dollar invested today would be worth more than a dollar if saved rather than invested. Why invest a dollar this year if it will buy more next year? See also next article.
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