Anyways, long rainy weekends are ideal for cat shaped foot warmers and reading long articles on economics (or the occasional Terry Pratchett book). But first, some links mentioned in class:
Greece Bond Issue Met With Success. WSJ. 295 basis points above a similar German Bund is a strange definition of success, but I suppose the alternative is definitely not.
Federal Reserve Bank of San Francisco's economics letters.
From Geopolitical Situation and Comparative Advantage. Data Dump:
African Studies Center at UPenn
Stats Portal at the OECD
International Crisis Group
Office of the US Trade Representative
Now, just a few links for your light Monday evening reading:
Greenlight Capital's 4Q2009 Letter. Dealbreaker.
On Bernanke's Confirmation:
What we should be debating? Scott Sumner. Which lead to the following link:
The Internet's Chief Bernanke Apologist Officer Speaks! Brad DeLong, which actually has a wonderful explanation of why Central Banks Spotting Bubbles may be a Hard Thing To Do. Which is related to:
Don't bubbles burst when pricked? Worthwhile Canadian Initiative. (HT: The Economist). Which contains a very simple pricing model for mortgages and mortgage backed securities (it also helps if your discount or interest rate is super low):
In the US, with non-recourse mortgages, there is no problem in explaining why buyers would pay very high prices for houses. Get a 100% mortgage: if prices go up you win; if prices go down the bet's off, because you walk away from the house and mortgage. Panglossian expectations are rational with that payoff function. The puzzle there is why anyone would lend them the money, not why they borrowed it to pay very high prices. If there was a bubble, it was a lenders' bubble, not a house buyers' bubble.
And hence we return to the problems of the Originate to Distribute Model and the near universal lack of due diligence by purchasers of MBS from 2002-2007.
But the problem was the