The clamor about JPMorgan’s losses in credit default swap speculation is dying away. That is unfortunate because it is the tip of the greatest economic policy challenge we face today. The questions should be clear: Why did a housing and…
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Changes make new winners, losers in global economy
Modern economies are complex. Consider how news from the last week will affect the Minnesota economy. One development is that the U.S. dollar continues to rise in value compared to the euro. Another is the rise in world wheat prices,…
When is a derivatives hedge not a hedge? When it’s a lie
CEO Jamie Dimon’s faux-apologetic defense of JPMorgan Chase’s recent trading loss, now estimated at $3 billion and rising, prompts a variation of an old joke: How do you know when an investment bank’s CEO is lying? It is when his…
Loss to JPMorgan relatively small, but risk to the system is great
JPMorgan Chase’s multi billion-dollar trading debacle may be small relative to the bank’s capital and profits. But this is not a simple private business transaction that the public should ignore. JPMorgan is not Joe’s Hardware. The big bank enjoys a…
Labor stats are conflicting, confusing because they’re complex
On May 4, when the U.S. Bureau of Labor Statistics released figures for April, the news was widely interpreted as bad. The total number of people employed had risen by only 115,000, less than in preceding months. And the unemployment…
When austerity does more harm than good
The recent elections in Greece and France were dominated by reaction to “austerity measures” — combinations of tax increases and spending cuts designed to reduce government budget deficits. Although we have not adopted such measures in our country for at…
Our inability to quantify satisfaction gums up economics
You can find some economic phenomenon in the things you do every hour. At least I tell my students that. So when I recently learned that I have a malignant carcinoma, it was hard to resist the challenge. Here are…
Why soaring soybean prices are stoking fears of global inflation
With soybeans passing $14.75 per bushel at many Minnesota country elevators, the ubiquitous oilseed is making world headlines. “Fears for return of global food inflation as soybean prices soar,” was the front-page headline in the Financial Times on April 30.…
What’s behind Social Security shortfall projections
A recent headline seemed clear: “Social Security will go broke in 2033.” The accompanying story described the latest projections for the Social Security trust funds. Everyone understands what it means to “go broke,” but most readers probably don’t understand exactly…
‘Gray market’ Supreme Court case much bigger than textbooks
A case the U.S. Supreme Court just agreed to hear about “gray-market goods” not only involves fascinating economic issues but might eventually affect all Americans. The case involves the legality of third parties importing and reselling goods that U.S. firms…