Monthly Archives: October 2008
Paulson, Brown and Harper
Nick Rowe asks why the Brown plan is better than the Paulson plan: The original Paulson plan was for the US government to buy assets from US banks. The Brown plan is for the UK government to buy equity in UK banks. The consensus among economists seems to be that the Brown plan is better […]
Canadian banks: The prodigal sons’ older brothers
Okay, so we're not supposed to be worrying about moral hazard any more. But that doesn't mean it's less annoying to watch your competitors screw up, get bailed out and scoop your business. Ottawa weighs new measures for banks: Ottawa is facing pressure to introduce further backstops for the Canadian banking system, following a series […]
Another reason to approve of Krugman’s Nobel prize
He knows the joke behind the title of this blog. When I realised the magnitude of the utter hopelessness of finding an interesting title for a blog on economics, written by a Canadian academic, I decided to go with irony. Update: Here's yet another. Paul Krugman points us to an autobiographical piece: Admittedly, there were […]
“If you can keep your head when all about you / Are losing theirs and blaming it on you”… you’ll lose the election
Consider two recent media feeding frenzies: Stéphane Dion admits that there might be circumstances in which an eventual Liberal government might run a deficit. Stephen Harper notes that "Canada is not the United States": there is no crisis of solvency in the Canadian financial system, and there's no evidence that one will occur anytime soon. […]
Real-time data, or why being an Irish macroeconometrician is a frustrating existence
I spent Friday and Saturday listening to these papers on dealing with 'real-time' data – that is, data that are actually available at a given point of time. The main question that people are grappling with is how to extract information from preliminary estimates that will be subsequently revised. As far as I can tell, […]
Why is buying US Treasuries considered a ‘flight to security’?
Let's consider: The adjective that best describes the US banking system is 'insolvent'. The government balance is horrible, and is about to become unspeakably horrible. The current account deficit is not quite as horrible as it once was, but it is still outside any normal country's comfort zone. So why would anyone seeking a safe […]
The federal government and the CMHC enter the fray
From a story in today's Globe and Mail: The federal government is moving to backstop the Canadian banks' capacity to lend money in an acknowledgment that not even the country's sturdy banking system is immune to the global financial crisis. A plan originally earmarked for Friday morning would see the government assume some mortgages currently […]
“Canada is not the United States”
An estimated 20,000 to 25,000 Canadian home owners are currently in arrears, said Will Dunning, chief economist at the Canadian Association of Accredited Mortgage Professionals (CAAMP), in a report released Monday. This means about 0.3 per cent of Canada's 8.05 million home owners are behind on their mortgages by three months or more, he said. […]
Liquidity, solvency, fire-sale and fair prices, and TARP: a simple model
Nick Rowe follows up his post on the origins of the crisis with some thoughts about how to deal with it: How is the Troubled Asset Relief Program supposed to resolve the problem of bank failures? I haven’t seen any clear answer, so thought I would sketch out the skeleton of a simple model where […]
When the going gets tough, the tough go shopping
Two stories that just popped up on the Globe and Mail website suggest that claims to the effect that Canada's financial sector is holding up relatively well may not be completely unrealistic: Crisis strengthens Manulife's hand in AIG bid: The chances of Manulife Financial Corp. winning parts of American International Group Inc. are rising sharply […]
Worthwhile Canadian Initiative 
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