But onto some light reading:
What would a pure nominal shock look like? The Money Illusion. A compelling perspective on the Financial Crisis of 08 and the recession. My only problem is this:
Where does policy go from here? There is one additional problem. Not only do real shocks such as financial turmoil and/or energy shocks often trigger bad monetary policy, but the resulting recession often leads to bad supply-side responses. By far the worst example was the NIRA in July 1933. But even in this recession we have a dramatic lengthening of the duration of unemployment benefits, from 26 weeks to as much as 73 weeks. (I also recall reading that Obama planned to reverse Clinton’s welfare reform, but I haven’t followed the issue closely.) In a normal recession workers who have exhausted unemployment benefits are more willing to accept any job at any wage rate. This increase in labor supply puts downward pressure on wage rates. In the current recession wages have been stickier than in 1921, and thus the unemployment will be more prolonged. FYI, 1921 was probably the purest nominal shock in American history. It is worth studying intensively if you want to see what the AS/AD model purports to describe.
Now, I understand how sticky wages are bad in this situation, but I have trouble with the idea that unemployment benefits are causing that. If 38% of people are getting unemployment insurance and, if memory serves, you only get approximately 50% of your original salary in UI, at what job and at what price are we looking at here? I suppose if faced with a 60% pay cut versus staying on unemployment (a 50% pay cut) and looking for another job with no pay cut, one might, at the margin, keep looking. Surely there is some ideal point on the "amount/length of benefits" versus "stickiness of wages" graph, but it seems that we (meaning actual economists) could estimate how much wages need to fall and thus where the ideal point on that benefits v. stickiness graph is.
After the Blowup. New Yorker. On the wailing and gnashing of teeth in Chicago.
Does it matter if markets are efficient? Beer and Numbers. As a follow up, What Goes Up . . . Tends To Stay Up, or fact checking the economist's call on housing.
The Banker Who Can't Get Out of Qatar. Behind a wall, but hey, free trial.
At SEC, the system can be deaf to whistleblowing. This, along with better regulation of people who market the largest financial transaction that most people will ever make in their lives, seems to be the key changes that need to occur in the wake of the financial crisis. Rather than proprietary trading. This is one suggestion.
On the heels of the big financial regulatory package, the Epicurean Dealmaker has two great posts: I'm Dancing as Fast as I Can and Conventional Wisdom.
Does Golden Pay for the CEOs Sink Stocks? WSJ. I don't know, I'll let you know when I get my CEO paycheck.
Female CEO's Win. CWS. So why do they paid 40% less?
Ben Bernanke's Jan 3rd Speech on Monetary Policy and the Housing Bubble.
2010 Forecast: No, no different. Accrued Interest. Most interesting was to see the breakdown in the central bank's following of the Taylor Rule from 2001-2009.
On non Financial Things:
Challenging Prop 8: The Hidden Story
Parker Lewis Can't Lose on DVD. !!!!!!!!
Noir City. A Fest of Noir Films!!!!!!