Greg “PrestoPundit” Ransom e-mails, with regard to my parsing of the views on recessions of Paul Krugman and Tyler Cowen, which contained a very brief discussion of Austrian business cycle theory: Krugman’s attacks on Hayekian economics are considered ridiculous, embarrassing — if not brain dead — by those who actually know Hayek’s work.  It’s pathetic [...]

The Washington Post‘s series on AIG Financial Products, the mostly independent derivatives operation that brought the downfall of the insurance giant, is among the best of the many tales of collapse being recounted in newspapers these days. A passage at the beginning of today’s second installment (part one is here) was especially appalling/compelling: For months, [...]

Russian spy/academic/goofball Igor Panarin’s prediction that the U.S. will break up into six parts in 2010, reported in the WSJ today, sounds like it might be kind of fun—finally, all Americans will be forced to get passports, and smug Europeans will stop making fun of us for the lack of them! And I’m certainly not [...]

In a post earlier today, Justin ruminated about how financial crisis might be just what the economy needs from time to time to keep everybody’s appetite for risk in check. Quoting Justin, paraphrasing Tyler Cowen: “If the Federal Reserve had just let the hedge fund Long-Term Capital Management fail in 1998—preferably in a messy and [...]

Barbara and I wrote a couple of pieces for TIME.com that ran last week when we weren’t paying attention. In case you weren’t paying attention either, here they are: Is There Really a Credit Crunch? by Barbara, which begins: Back in September, V.V. Chari, an economist at the University of Minnesota and an adviser to [...]

Tyler Cowen makes the case in Sunday’s New York Times that if the Federal Reserve had just let the hedge fund Long-Term Capital Management fail in 1998—preferably in a messy and disorderly fashion—we’d be much better off today: With the Long-Term Capital bailout as a precedent, creditors came to believe that their loans to unsound [...]

Clearly, we are not a family that shies away from food coloring.

The top West Coast regulator of the Office of Thrift Supervision has been removed from his job while the Treasury Department’s inspector general looks into some weirdness surrounding backdated capital infusions into since-failed thrift IndyMac. Add that to the demise of the biggest savings institution regulated by OTS, Washington Mutual, the loan troubles inherited from [...]