Financial Crisis

Rethinking the Social Safety Net

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The COVID-19 epidemic wreaked havoc on the majority of American households. The USC Dornsife poll reported on April 17th that 15% of previously employed people in the country have lost their jobs because of the virus. That translates into close to 26 million newly unemployed. While many of those jobs will come back once we get through this, I do not think all of them will. Future social distancing rules will, for instance, limit the number of patrons a restaurant or a bar can serve. Fewer customers means fewer employees to serve them.  read more »

The Pandemic Road to Serfdom

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Even before the outbreak of the Covid-19 pandemic, America, like most higher-income countries, was already heading toward a neo-feudal future: massive inequality, ever-greater concentrations of power, and increasingly widespread embrace of a uniform (albeit secular) religion. The pandemic, all too reminiscent of the great plagues of the Middle Ages, seems destined to accelerate this process.  read more »

High Metabolism Money

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As part of my usual exploration of towns and cities around the country I wander up and down streets taking photos. I have an inexhaustible supply of pictures of the generic American landscape. But every once in a while someone will come running out of a building demanding to know who I am and why I’m photographing their property. Bank managers are frequent objectors.  read more »

Class(room) Warfare

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The actress Felicity Huffman—along with 13 other parents charged in the college admissions scandal—entered plea deals last week, putting pressure on actress Lori Laughlin and her husband, designer Mossimo Giannulli, to do the same. Prosecutors are hinting that if Laughlin doesn’t accept a deal she could face 20 years in prison, 3 years of probation, and a $250,000 fine.  read more »

Ten Years After Lehman Collapsed, We’re Still Screwed

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The collapse of Lehman Brothers 10 years ago today began the financial crisis that crippled and even killed for some the American dream as we had known it. Donald Trump might be starting to change that, at least for Americans who aren’t determined to remain in our bluest and priciest cities.  read more »

The Precariat Shoppe

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The precariat is a term coined to describe the segment of the population that lives without security or predictability. These days it often refers to the former American middle class that’s currently experiencing reduced circumstances. There’s always been a precariat, but it usually includes a minor subset of the population that no one really likes or cares about. Indentured Irish servants, black slaves, Jewish and Italian sweatshop workers, Mexican field hands, Puerto Rican cleaning ladies… It’s a long list.  read more »

The Futility of Annual Top 10 Predictions

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In every recent year, a black swan event has made top 10 lists appear quaintly naive and unimaginative. Our list is probably no better.

This time of year, top 10 predictions are all the rage. These lists can be interesting and entertaining but how useful are they really?

This question goes to the heart of forecasting. How futile or how useful is an attempt to forecast the economy, or technology, or world events for the next twelve months? There are three answers.  read more »

Obama's not so glorious legacy

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Like a child star who reached his peak at age 15, Barack Obama could never fulfill the inflated expectations that accompanied his election. After all not only was he heralded as the “smartest” president in history within months of assuming the White House, but he also secured the Nobel Peace Prize during his first year in office. Usually, it takes actually settling a conflict or two — like Richard Nixon or Jimmy Carter — to win such plaudits.  read more »

A Capital Improvement and Revitalization Idea for Detroit

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You may have heard that Detroit is in the midst of a modest but enduring revival in and around its downtown. Residents and businesses are returning to the city, filling long-vacant skyscrapers, prompting new commercial development and revitalizing adjacent old neighborhoods. As a former Detroiter I'm excited to see the turnaround. After so many false starts, Detroit's post-bankruptcy rebound seems very real.  read more »

The Incompetence Hypothesis to Explain the Great Recession

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Seeking an understanding of the Great Recession, I am finding that most of the 2008 financial crisis and its aftermath can be explained by incompetence. In the final weeks of writing a book on the systemic failure in US capital markets, I had to re-read the Securities and Exchange Commission (SEC) Inspector General’s 2009 report on their failure to stop Bernard Madoff despite having received credible evidence of a Ponzi scheme.  read more »