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Sunday, September 2

2nd Sep - Weekender: Economics & Regulation

Sections this week Regulation, Economics, Housing. Especially in Economics the Gordon's paper is interesting even for non-specialists. 

Previously on MoreLiver’s:
31.8. Best of August most read pieces + all my ’views’

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BizDaily: The business of lobbying (30 Aug, 17min) BBC (mp3)
Follow the money - that's what the legendry whistleblower "Deep Throat" advised the reporters who revealed the Watergate scandal. And that's what Business Daily has been doing. The self-styled most notorious lobbyist in Washington reveals how America's 3 billion dollar political lobbying industry uses hard cash to buy influence.

Why Are the Big Banks Suddenly Afraid?Simon Johnson / EconoMix / NYT
Top executives from global megabanks are usually very careful about how they defend both the continued existence, at current scale, of their organizations and the implicit subsidies they receive… This pattern has shifted in recent weeks, with moves on at least three fronts.

Wall Street Granted Another Brief ReprieveDealBook / NYT
The delay is limited yet significant. Wall Street now has until Jan. 1, instead of October as initially planned, to adopt a battery of standards. The move grants the financial industry additional time to comply with rules that, for example, will require firms to verify that their trading partners meet certain “eligibility standards” and to confirm that they recommend trading strategies “in the best interests” of their clients.

The Unintentional Consequences of Dodd-FrankInstitutional Investor
Bankers can generally be expected to resist or react negatively to regulations. When confronted with 2,300 pages of new law — the Dodd-Frank Wall Street Reform and Consumer Protection Act — and the prospect of thousands more pages of regulatory rules, compounded by parallel actions in international jurisdictions, industry executives predictably went ballistic.

Greed and Debt: The True Story of Mitt Romney and Bain CapitalRolling Stone
How the GOP presidential candidate and his private equity firm staged an epic wealth grab, destroyed jobs – and stuck others with the bill

The Federal Bailout That Saved Mitt RomneyRolling Stone
Government documents prove the candidate's mythology is just that

Is the financial sector worth what we pay it? OECD Insights
The financial crisis and subsequent Euro problems show that we are paying vast sums for a system that, as Joseph Stiglitz, former chief economist of the IMF, points out, doesn’t allocate capital where needed, causing capital flows that are pro-cyclic, exacerbating peaks and lows of business cycles.

Finance is in need of a technological revolutionAndrew Lo / FT
Financial technology can facilitate tremendous growth. History shows that, when used irresponsibly, it can also lead to great devastation. Let us hope that the new financial system will be more Moore and less Murphy.

Time to resurrect the ‘missing variable’?alphaville / FT
Alan Greenspan becoming confused about America’s exceptional growth in the 1990s… Greenspan, confounded by the disconnect, concluded that some sort of missing variable must have been responsible for the mismatch.

Ahhhh! No robots!alphaville / FT
It questions the assumption, nearly universal since Solow’s seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history.

Gordon on GrowthThe Grumpy Economist
Gordon's paper is about the biggest and most important economic question of all: Long-run growth. It's easy to forget that per-capita income, the overall standard of living, only started to increase steadily in about 1750.

Summertime blues: The slowdown is spreading around the worldThe Economist

Democracies and debt: Voters are now facing a harsh truthThe Economist

Credible Promises about 'Irresponsible' PolicyEconomist’s View
We need to push on both the monetary and fiscal policy fronts. Neither policy alone will be sufficient to get the job done (even without the political hurdles standing in the way), and it's far past the time for both Congress and the Fed to do more about our crisis level unemployment problem.

Ultra Easy Monetary Policy and the Law of Unintended ConsequencesFED (pdf)

Financial crisis: the printing press has reached its limitsThe Telegraph
Central bankers may have averted outright disaster, but they are powerless to do more

Global Housing CyclesIMF (pdf)
This paper documents the characteristics of housing cycles in a large set of countries, and examines the determinants of house price movements. Empirical analysis shows that house price dynamics are mostly driven by income and demographics but fluctuations in these fundamentals and credit conditions can create deviations from the implied equilibrium path. We conclude with a discussion of the macroeconomic implications of house price corrections.

House Prices, Credit Growth, and Excess Volatility: Implications for Monetary and Macroprudential PolicyFED (pdf)

Housing Equity Withdrawal, Property Bubbles and ConsumptionCB of Ireland (pdf)

House price responsiveness of housing investments across major European economiesECB (pdf)

Excessive bank risk taking and monetary policyECB (pdf)

Systematic Risk, Debt Maturity and the Term Structure of Credit SpreadsCB of Canada (pdf)

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