Bravo to John Geanakopolos of Yale had his Archimedes, “Eureka!” moment when rereading Shakespeare’s Merchant of Venice. Indeed, Shylock’s “pound of flesh” is what Geanakopolos saw as the “collateral stretching” in the mortgage market when there was too much investor demand for too little mortgage supply. In essence, to accommodate demand (caused by too loose a money supply), lenders artificially “expanded” supply (caused by Fannie-Freddie forced junk expansion) by lowering collateral standards.
Credit Bernanke who had worked in the academic area with recognizing John’s innovation and inviting him to participate in Fed discussions. See the front page WSJ article here.
Tom Donohue, Chamber of Commerce President is not a “rent seeker!” When so many of our business leaders have traded solid principal for competitive expediency and advantage, it is refreshing to see that the Irish CoC President is willing to stand up and oppose Obamacare. Some of the big wig corporate members who quit because of Donohue’s stance have had second thoughts. Bottom line, Donohue won’t put up with Obama statism which costs this country jobs and growth. Kimberley Strassel’s WSJ interview is worth the read.
Congratulations to the voters of Virginia and New Jersey. Let’s hope intelligence permeates the ranks of voters across the nation in 2010!
David Goldhill who watched his father die unnecessarily took up the effort to understand healthcare and health. Both are unrelated and indeed distinct from insurance. He penned a long article articulating some of the changes we have hear at our symposium. He also had an excellent Cato podcast which is inserted here. Basically, he says, if you knew what it costs as a percent of your income, you wouldn’t buy it!
Tom Motherway