The country faces difficult questions: Can bubbles in stock and real estate prices be deflated without hurting employment and output? Can a construction sector swollen by years of overbuilding return to normal levels? Will unsustainable imbalances in the flows of…
Category: Other
At some point, no one wants our dollars
Comments about the U.S. dollar at a recent OPEC meeting illustrate a common fallacy: that because oil is priced in dollars, a weaker dollar doesn’t affect our energy costs. This is a comforting idea, but it is false. World currency…
Perspective leads to thanks
As the U.S. economy slides toward recession in this Thanksgiving season, some grumps may note little for which to give thanks. Hundreds of thousands of homeowners are facing the loss of their homes, and more people are likely to be…
Export tax can help or hurt
Taxing exports is a nice racket under the right conditions, but self-defeating under others. The contrasting situations of Argentine farming and Wyoming coal production illustrate the complications that may someday face Minnesota, if world metal prices stay high. In Argentina,…
Shocks hit small banks harder
Ongoing problems in the U.S. economy continue to manifest themselves in new ways. TheStreet .com, an Internet-based financial news service, tabulated a list of banks with high exposure to losses on construction loans. Six of the top 20 are in…
Books put crisis in perspective
When the economy is fraught with fear and uncertainty, as it is right now, sometimes it is better to read history than the stuff academic economists write for each other. The 1929 stock market crash, and the Great Depression that…
Cure for $100 crude? Raise taxes on big rigs
Eighteenth century-English writer Samuel Johnson once observed, “When a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.” Crude oil near $100 per barrel ought to concentrate our minds in U.S. society, but that…
Greenspan hits pitfall in memoir
The danger of writing contemporary history is that between finishing the manuscript and the book’s publication, something will change that will make you look foolish. Just ask former Federal Reserve chairman Alan Greenspan, whose memoir hit the stores just as…
Leverage becomes enemy when prices fall
Brrr! Tuesday’s news that the average price of a Twin Cities-area home in August was 4 percent less than a year earlier sent chills down homeowners’ spines. For most households, their home is their most important asset and constitutes most…
Know what Fed’s job is, then let’s do it
Sheer luck may allow you to kill two birds with one stone, but you should not count on it. The same is true in economic policy. “You cannot accomplish two policy goals with only one policy instrument,” is how economists…