From Robert Lucas‘s 2003 presidential address to the American Economics Association:

Macroeconomics was born as a distinct field in the 1940s, as a part of the intellectual response to the Great Depression. The term then referred to the body of knowledge and expertise that we hoped would prevent the recurrence of that economic disaster.

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I’ve addressed this before, but it keeps coming up–in e-mails from readers, among many other places–so I’m gonna outsource to Dan Gross:

Fannie and Freddie, which didn’t make subprime loans but did buy subprime loans made by others, were part of the problem. Poor Congressional oversight was part of the problem. Banks that sought to

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Fed chairman Ben Bernanke gave his first speech in a month today (although I guess he did do some testifying a couple weeks ago). In typically laid-back Bernankian fashion he described all the crazy stuff that’s been happening, described the response by the Fed, Treasury and FDIC, and said that he believed these “bold actions … …

When Hank Paulson and Ben Bernanke testified before Congress a few weeks ago, they got asked about regulating credit default swaps—insurance contracts tied to bonds that have taken on a potentially dangerous life all their own. The response was basically: It’s really important to sort these things out, but also really complicated, and …

Governments around the world have been acting to avert panics by retail bank customers, and they’ve mostly succeeded. That’s a good thing, but it’s also sort of beside the point. “Main Street depositors are keeping confidence,” FDIC chairman Sheila Bair said when I talked to her last week. “It’s other banks that are the problem.”

The …

The next bold experiment (or desperate gambit, if you prefer) from the Fed appears to be a plan to start buying commercial paper directly from the companies that issue it. The reason is that the commercial paper market, a key source of short-term funding for big companies, is shrinking rapidly.

The Fed mentioned as sort of an aside to a …

The Dow ended the day down 370 points, after being down more than 800 in midafternoon. How can this be explained?

1. Pure random chance. As Nassim Taleb writes in Fooled by Randomness:

To be competent, a journalist should view matters like a historian, and play down the value of the information he is providing, such as by saying, “Today

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Former Fed Chairman Paul Volcker, former Fed Vice Chairman Roger Ferguson and former Bank of Israel Governor (and AIG vice chairman!) Jacob Frenkel had a little press conference this morning to discuss the structure of financial regulation or–more precisely, a report called The Structure of Financial Regulation (pdf; and it’s just the …

For the last few weeks the U.S. stock market has been a haven of relative calm in global financial markets. Seriously. I know it doesn’t look calm, what with drops (and occasional increases) of 5+% becoming the order of the day. But instead of freezing up like credit markets, the stock market been functioning smoothly as investors assess …

My attempt to answer a reader’s long list of questions about the bailout has been condensed into an article in the new TIME (with the soup line on the cover). Barbara also has a piece in the magazine about current consumer credit conditions, which is also condensed from something that ran first online. Meanwhile, the magazine also …

On the topic of the how, even with the bailout bill (sorry, the rescue package), all of our problems won’t be solved overnight, I offer a story I wrote for Time.com today. It starts:

To understand how the credit crunch is hitting American business — and, in turn, you — look no further than The Dog Shop, a pet supplies and grooming

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