Financial Crisis

Recession or Depression — Are We Really Better Off Than in the 1930s?

  • By
  • Kat Aaron,
  • New America Foundation
January 6, 2012 |

Some call this moment the Great Recession. As the hardship has lingered, others have begun calling it the Little Depression. But equating the hard times of the 1930s with the hard times of today is mostly overblown rhetoric. Or is it?

On the surface, the comparisons are obvious: a period of great wealth and exuberance, followed by a stock market crash. After the crash, widespread economic pain. Millions of people out of work, thousands of homes lost. Families going hungry.

Inequality and the Global Crisis -- Evidence and Policies

  • By Raymond Torres, International Labour Organization
January 5, 2012

This presentation was part of the World Economic Roundtable.  A summary of the Roundtable session can be read here.

Inequality, Leverage and Crises

  • By Michael Kumhof, International Monetary Fund and Romain Ranciere, International Monetary Fund and Paris School of Economics
January 5, 2012

This presentation was part of the World Economic Roundtable.  A summary of the Roundtable session can be read here.

Inequality, Wages and Financial Crises

January 5, 2012

At the last World Economic Roundtable, Michael Kumhof, Deputy Division Chief of the Modeling Division of the International Monetary Fund, and Raymond Torres, Director of the International Institute for Labour Studies of the International Labour Organization, came to discuss the relationship between inequality and financial crises. 

Year of the Fist

  • By
  • Romesh Ratnesar,
  • New America Foundation
December 22, 2011 |

By historical measures, there’s really not all that much to be angry about. Since 1981, the proportion of the developing world living in extreme poverty has fallen from 50 percent to less than 20 percent, according to the United Nations. Infant mortality is down across the board; the number of girls in school is up. Terrorists and tyrants get their comeuppance with toe-tapping regularity. The chances of dying in war have never been lower. In 2011, the 7 billionth person was born into a world that’s richer, healthier, and safer than at any time in history.

Programs:

Fannie and Freddie did not Cause the Financial Crisis

January 3, 2012
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I missed this on my way out of town, but I wanted to steer people to this article by Joe Nocera of the New York Times.

He writes about the workings of an ideologically-driven campaign to lay the entire financial crisis at the feet of Fannie Mae and Freddie Mac, the government-sponsored entities charged with boosting mortgage lending. Yes, mistakes and miscalculations were made by these GSEs and we certainly should be asking what we can do differently, but in my opinion Nocera’s diagnosis is spot on. The subprime mortgage market had already exploded before Fannie and Freddie began purchasing these loans in earnest. In fact, they were actually late to the game. Once on the field, they began buying up these loans not to promote low- and moderate –income homeownership but to chase market share. They exacerbated the problem but hardly caused it. They should have stayed on the sidelines.

It was the drive for market share—and not the requirement to meet affordable housing mandates—that moved Fannie and Freddie into the already exploding subprime market. Nocera paints the picture of a textbook operation to muddy the waters of understanding, with staring roles played by the Wall Street Journal editorial page and the American Enterprise Institute. He calls it “The Big Lie” and it depends on an echo chamber to advance the thesis that government rather than actors in the financial sector are to blame for the advent of the financial crisis and its aftermath.

What to do about Fannie and Freddie remains an open question. The Obama administration has sketched out a set of potential options but (for some reason) doesn’t believe they can advance a reasonable, bipartisan discussion on the Hill. That’s too bad because there are important issues to address, such as how to help aspiring families become responsible homeowners in the future get out from under the debilitating debt of mortgages that exceed the value of thier homes. I wholeheartedly agree with Nocera’s conclusion:

Three years after the financial crisis, the country would be well served by a real debate about the role of government in housing. Should the government be helping low- and moderate-income Americans own their own homes? If so, is there an acceptable level of risk? If not, how do we recast the American dream?

To have that debate, though, we need a clear understanding of what role the government’s affordable-housing goals did — and did not — play in the crisis. And that is impossible as long as the Big Lie holds sway.

Don't Miss These Upcoming Asset-Building Presentations

January 3, 2012
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If you live or work in the Washington, D.C. / Virginia / Maryland area and are interested in asset-building, you are in for a treat. During January 11-15, 2012, approximately 20 individual research papers and posters focusing on asset-building research will be presented at the annual conference of the Society for Social Work and Research (SSWR). This research is the latest and greatest from some of the leading researchers in the asset-building field, including Gina Chowa, Michal Grinstein-Weiss, Vernon Loke, Jin Huang, and Youngmi Kim. Topics include savings at tax time, financial capability of youth in international settings, home ownership and housing stability, and debt and asset accumulation. The conference will be held at the Grand Hyatt Washington. Presentations that are "don't miss" are listed below. Click on the number at the end of the titled presentation for a direct link to the complete abstract.

Policy and Markets: How, Not If

December 15, 2011

--This is a column by Bruce Jentleson, Professor at Duke University, and Jay Pelosky, Principal of J2Z Advisory. It originally appeared on the Huffington Post.

The policy vs markets debate makes for good rhetoric but lousy results. It's not if government should play a role in the economy. It's how best to do it.

Obama's 2012 Reelection Strategy: Blame the Republicans

  • By
  • Peter Beinart,
  • New America Foundation
December 12, 2011 |

There are two ways a president can run for reelection. The first is to boast about your success in your first term, and promise to build on it in the next. That's what Dwight Eisenhower did in 1956; it's what Ronald Reagan did in 1984; it's what Bill Clinton did in 1996. For the strategy to work, Americans have to be relatively satisfied with their lot, and relatively optimistic about the future.

Programs:

The Globalization of Finance: The Tide Turns

December 7, 2011

-- This is a guest post by Jay Pelosky, Principal, J2Z Advisory, LLC.  It was originally posted on the Huffington Post. --

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