... economists joined together in a cele-
bration of the Goldilocks economy. With the dismal record of the
1970s as their point of comparison, mainstream analysts focused on
the not-too-hot, not-too-cold ... ABCs of Risky Finance • 29
Figure 2.1
040 2009896 949 2908886 848 2807876 747 2706866 646 2605856 545 2
15
10
5
0
−5
Year over Year % Change
The Great Inflation of the...
... lower
than the value of what is owed to them—their assets. When they
subtract their liabilities from their assets, the remainder is their
equity.
The problem for banks arises if the banks have lots of ... the 1980s? Figure 4. 4 shows that risky
corporate bond rates fell irregularly versus Treasury borrowing costs
for most of the second half of the decade.
Taken together...
... excessive
uses of risk and concentration of investment. And the interplay of these
two flaws explains each of the major economic declines of the past
25 years.
In summation, the savvy analyst must be of two ... to the Fed’s list of poten-
tially destabilizing excesses. Why? Sadly, it was not the force of ideas
that carried the day. It was the end of the Grea...
... T
HE
C
OST OF
C
APITALISM
8988878685 848 3
40 000
3 644 4
32889
29333
25778
22222
18667
15111
11556
8000
5000
45 56
41 11
3667
3222
2778
2333
1889
144 4
1000
Index Index
Gains for Japanese Shares in the Late ... any fun playing the role of party pooper. What fol-
lows is a piece I wrote on the eve of the collapse of Nasdaq, in the
spring of 2000.
2
The Brave-New-Worl...
... thought that by the end of the year the
funds rate would fall to 4 percent. Quite a few e-mails greeted me after
the show, most of them critical, and one accused me of excessive use of
hallucinogenic ... sharply. The final climb for overnight rates had
forced even the most creative mortgage providers to lift their teaser
rates the cost of money forced them to make t...
... and a writer of the insurance. If things go as planned, the buyer
pays the insurer the premium. If things go awry, the insurer pays the
buyer. Either way, one of the two parties gets the money promised ... theory, and its architects, must accept
some of the blame for the upheaval that came to a climax in
autumn 2008.
0806 040 2009896 949 2908886 848 2807876 747 27068...
... leading up to the crisis of 2008, many champions of
free market capitalism warned about the tenuous nature of the global
credit markets. Warren Buffett, the sage of Omaha, labeled the mar-
kets ... clearly the case in 20 04 and
2005—then there can be no confusion about the emerging policy cir-
cumstances. Policy is becoming more accommodative, irrespective of
the...
... 57
Bernanke, Ben
ahead of European Central Bank
colleagues, 144
angst about deficits (2006), 44 45
on asset markets, 78
Bernanke’s calamity, 144 – 147
casting a blind eye, 4
Bernanke, Ben (Continued)
efficient ... rates, 147
risk problem as systemic, 1 84
stages of capitalist finance, 42
Taylor rule retrofit, 188
Mishkin, Frederick, 145
Mishkin strategy, 145 – 146
Modern finance, 1...
... the stock market crash of 1990, the Asian crisis of the mid-1990s,
the fabulous technology boom/bust cycle at the turn of the millen-
nium, and the unprecedented rise and then collapse for U.S. ... GDP
040 2009896 949 2908886 848 2807876 747 2706866 646 2605856 545 2
it is not the time to dream of punishing the guilty. Central banks must
overcome their squeamishness...
... to the Fed’s list of poten-
tially destabilizing excesses. Why? Sadly, it was not the force of ideas
that carried the day. It was the end of the Great Moderation. The breath-
taking nature of the ... excessive
uses of risk and concentration of investment. And the interplay of these
two flaws explains each of the major economic declines of the past
25 years...