Alexander William Salter: Politics, Not Markets, Makes Banking Unstable
 03/29/23 10:23AM - Is fractional-reserve banking inherently unstable? Over at National Review, Edwin Burton, a visiting economics professor at the University of Virginia, argues that the "mismatch between the maturity of the source of funds and the maturity of the use of funds" creates a run-prone system. His argument, however, overlooks important contributions …more…
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Greg Ip: A Rapid-Finance World Must Ready for a Slow-Motion Banking Crisis
 03/29/23 09:00AM - Though the Fed and FDIC have stopped contagion from SVB for now, smaller banks could face pressure for years to come. In decades past, banking crises around the world routinely took years to unfold. From 1980 to 1994, roughly 3,000 mostly small U.S. savings and loan institutions and banks were closed or bailed out. The S&L crisis began when …more…
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Desmond Lachman: The European Central Bank Is Stuck Between a Rock and a Hard Place
 03/29/23 06:30AM - Europe faces an even worse economic predicament than the United States. Spare a thought for Christine Lagarde, the president of the European Central Bank (ECB). She now finds herself in a worse monetary-policy predicament than Jerome Powell, her counterpart at the Federal Reserve. Like Powell, Lagarde is having to pursue a hawkish monetary …more…
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Ed Yardeni: Bad Breadth Again
 03/28/23 11:14PM - The ratio of the equal-weighted to market-cap-weighted S&P 500 stock price indexes is an interesting measure of market breadth. It is available daily since 1990 (chart). Based on this limited period, we can see that the ratio tends to rise following recessions and to peak before recessions. It bottoms just before or during recessions.The …more…
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Betsy McCaughey: China controls your meds — and that should scare you
 03/28/23 07:37PM - Democrats and Republicansbattered TikTok’s CEO at a House hearing Thursday — for good reason. The Chinese app poses a national-security risk, accumulating troves of data on its American users. CEO Shou Zi Chew’s slithery comment “I don’t think spying is the right way to describe it” only heightened concerns. Too bad another Chinese threat …more…
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Charles Calomiris and Phil Gramm: In Today’s Banking Crisis, Echoes of the ’80s
03/28/23 03:30PM - Losses at SVB, Signature and other banks reflect the risk from borrowing short and lending long. It’s natural to look to the 2008 subprime crisis for insights about why our banking system is at risk. But that crisis was a housing finance collapse driven by government policies encouraging banks to take enormous default risk in the mortgage …more…
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William Dunkelberg: If It’s Not One Thing, It’s...
 03/28/23 01:27PM - It is bad enough that we have to deal with sticky inflation, now we're talking about a possible banking crisis. The policy to fight inflation is "tight money," slow the economy, reduce spending financed by loans. The policy to deal with bank illiquidity? Just the reverse. What's a regulator to do? Over the shoulder, the answer is don't …more…
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Vivekanand Jayakumar: Shifting monetary policy lags confuse markets and central bankers
 03/28/23 11:30AM - Financial market participants have spent considerable time and resources trying to gauge the future direction of U.S. monetary policy. Yet, many have found it hard to get a clear or consistent handle on the factors influencing both market and policy interest rates. Recent spikes in uncertainty are, however, not a result of some mysterious …more…
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Allison Schrager: A Slow Recovery for the Subways
 03/28/23 11:17AM - If you go into bars or restaurants it seems like New York is back. Even midtown and downtown office districts are crowded during the day. But public transportation has still not recovered. Subway, bus, and train ridership is still only about 65% of its pre-pandemic levels. The data is from the MTA based on ridership on March 22 in 2021, 2022, …more…
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Nathan Lewis: Why Joe Biden’s Tax Plan Is A Disaster
03/28/23 09:33AM - I was interviewed recently by a somewhat Left-leaning outlet, and the question came up: Why don't we "tax all income the same"? In other words, shouldn't we tax dividends, interest and capital gains at the same (high) rates as the regular income tax? This question has been around forever, but it is particularly pertinent now that President …more…
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Raghuram Rajan and Viral Acharya: The Fed’s Role in the Bank Failures
 03/28/23 08:59AM - CHICAGO – There are four reasons to worry that the latest banking crisis could be systemic. For many years, periodic bouts of quantitative easing have expanded bank balance sheets and stuffed them with more uninsured deposits, making the banks increasingly vulnerable to changes in monetary policy and financial conditions. The recent …more…
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Allison Schrager: Biden Has to Learn the Same Lesson as SVB
 03/28/23 06:31AM - The US government has been borrowing and spending as if interest rates would be low forever. Now the Piper wants a word. In hindsight, it was obvious it wouldn't last. Low interest rates — the result of shifts in the global economy, economic stability, low inflation and monetary policy — couldn't stay at zero forever. But many people behaved …more…
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