The Federal Reserve’s announcement Tuesday that it would buy as much as $200 billion in commercial paper was a remarkable but poorly understood action in a week of extraordinary events. Like other Fed and Treasury actions in recent weeks, it…
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How bad loans translated to big problems
With the Treasury and the Federal Reserve desperately throwing in unprecedented sums to stem the ongoing financial crisis, ordinary people have a right to ask, ‘How did these big financial institutions lose all this money? Where did it go?’ The…
Bailout no cure for bad debt, but it will help economy
The American people need to realize that while some broad-based financial bailout may be necessary, no version will provide a quick or sure cure for our nation’s problems. A bailout is a palliative rather than a cure. By ‘palliative,’ I…
Recession risks isn’t “if,” it’s when–maybe now
Shakespeare noted that “hope springs eternal in the human breast,” but sometimes people take it to ridiculous extremes. A wire service story last week provided an example with this opening line: “Ben Bernanke bluntly warned Congress it risks a recession,…
Good questions, and some answers, on bailout
The $700 billion ‘bailout’ proposed by the dynamic duo of Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke last week is emerging as one of the most contentious issues in years. Everyone senses a lot is at stake…
Plenty to blame for ignored warnings
This is a busy enough time for college teachers, but it must be hell for those who are authors of finance and economics textbooks. They must be burning the midnight oil every night as they revise their works to remove…
Snap judgments decide who’s “too big to fail”
The average citizen may feel confused. In March, we heard it was essential the Federal Reserve lay out an unprecedented sum of money to keep Bear Stearns from collapsing. In July, Treasury Secretary Henry Paulson told Congress it was essential…
When to hold, when to fold on house?
I’m not sure if groups of recovering stock traders ever hold hands to intone, “God, grant me the serenity to cut my losses short, the courage to let my profits run, and the wisdom to know the difference,” but they…
Do OPEC pricing claims defy Econ 101? Maybe not
OPEC President Chakib Khelil probably didn’t sound credible to many people Wednesday when he announced that the cartel is cutting production by more than a half-million barrels per day, but that consumers needn’t worry — the decision wouldn’t affect prices…
Who’s retired? Definition makes a difference
A recent Associated Press story notes “‘more Americans work to later age.” Yet over the past couple of decades, the average age at which people apply for Social Security, now about 63, has been dropping at least slightly. So what…