PRINCETON – National governments’ responses to the latest banking crisis confirm once again that some countries play by different rules than others. This double standard is bad for long-term planning within those countries and represents yet another threat to multilateralism. A relatively small-scale banking crisis has been sufficient ...

In the Wall Street Journal, Senator Joe Manchin writes that he has a problem with the way in which the Biden administration is implementing the Inflation Reduction Act: Despite explicit direction from Congress to pay down our debt in the Inflation Reduction Act, the administration seems more determined than ever to pervert that law and ...

Past declines have been about unwinding excesses in investment, hiring or construction. This one is about unwinding excessive belief in low interest rates. We've been watching slumps ripple through various parts of the economy over the past 18 months: technology startups and stocks, regional banks and growing concern about commercial real ...

MILAN – Policymakers in both the United States and China seem to have fully accepted, and even embraced, the logic of economic decoupling. But what exactly will decoupling entail, and what will its consequences be? Over the last year, the trajectory of Sino-American relations has become indisputable: the United States and China are headed ...

Excessive government interference in the market hurts consumers and thwarts policy goals. It also gets in the way of the government itself. George McGovern, the Democratic Party's 1972 presidential nominee, was a liberal icon. During many years in political office, including as a U.S. senator from South Dakota, McGovern successfully ...

It's no spending cuts and $5 trillion in tax hikes. Probably the most important fiscal negotiation that's going to take place this year is over the debt ceiling and the budget. So far, it's gone nowhere. Speaker McCarthy met with President Biden two months ago with no results, and they haven't met since. No cup of coffee. No high tea. No ...

Instead of implementing the law as intended, his administration subverts it for ideological ends. America is fast approaching another needless emergency—the raising of the national debt ceiling. This impending crisis isn’t an accident but a result of the inaction of various actors who refuse to confront fiscal reality, sit down, negotiate and ...

The overregulation of American housing markets began in the nation's coastal, educated, productive enclaves. Over time, however, barriers to building have spread. Tony suburbs of Phoenix and Austin, which once left their builders free to construct plentiful affordable housing, have now become almost as restrictive as the Boston area. The ...

Is fractional-reserve banking inherently unstable? Over at National Review, Edwin Burton, a visiting economics professor at the University of Virginia, argues that the "mismatch between the maturity of the source of funds and the maturity of the use of funds" creates a run-prone system. His argument, however, overlooks important contributions ...

Though the Fed and FDIC have stopped contagion from SVB for now, smaller banks could face pressure for years to come. In decades past, banking crises around the world routinely took years to unfold. From 1980 to 1994, roughly 3,000 mostly small U.S. savings and loan institutions and banks were closed or bailed out. The S&L crisis began when ...

Europe faces an even worse economic predicament than the United States. Spare a thought for Christine Lagarde, the president of the European Central Bank (ECB). She now finds herself in a worse monetary-policy predicament than Jerome Powell, her counterpart at the Federal Reserve. Like Powell, Lagarde is having to pursue a hawkish monetary ...

Some progressive commentators have put on a show lately of being baffled by what Republicans or conservatives mean when they use the term "woke" or "wokeness" to refer to left-wing identity politics. A momentary brain freeze by a young conservative writer who stumbled when she was asked on camera to define the term unleashed an avalanche ...

The ratio of the equal-weighted to market-cap-weighted S&P 500 stock price indexes is an interesting measure of market breadth. It is available daily since 1990 (chart). Based on this limited period, we can see that the ratio tends to rise following recessions and to peak before recessions. It bottoms just before or during recessions.The ...

Democrats and Republicansbattered TikTok’s CEO at a House hearing Thursday — for good reason. The Chinese app poses a national-security risk, accumulating troves of data on its American users. CEO Shou Zi Chew’s slithery comment “I don’t think spying is the right way to describe it” only heightened concerns. Too bad another Chinese threat ...

Losses at SVB, Signature and other banks reflect the risk from borrowing short and lending long. It’s natural to look to the 2008 subprime crisis for insights about why our banking system is at risk. But that crisis was a housing finance collapse driven by government policies encouraging banks to take enormous default risk in the mortgage ...

It is bad enough that we have to deal with sticky inflation, now we're talking about a possible banking crisis. The policy to fight inflation is "tight money," slow the economy, reduce spending financed by loans. The policy to deal with bank illiquidity? Just the reverse. What's a regulator to do? Over the shoulder, the answer is don't ...

Financial market participants have spent considerable time and resources trying to gauge the future direction of U.S. monetary policy. Yet, many have found it hard to get a clear or consistent handle on the factors influencing both market and policy interest rates. Recent spikes in uncertainty are, however, not a result of some mysterious ...

If you go into bars or restaurants it seems like New York is back. Even midtown and downtown office districts are crowded during the day. But public transportation has still not recovered. Subway, bus, and train ridership is still only about 65% of its pre-pandemic levels. The data is from the MTA based on ridership on March 22 in 2021, 2022, ...

I was interviewed recently by a somewhat Left-leaning outlet, and the question came up: Why don't we "tax all income the same"? In other words, shouldn't we tax dividends, interest and capital gains at the same (high) rates as the regular income tax? This question has been around forever, but it is particularly pertinent now that President ...

CHICAGO – There are four reasons to worry that the latest banking crisis could be systemic. For many years, periodic bouts of quantitative easing have expanded bank balance sheets and stuffed them with more uninsured deposits, making the banks increasingly vulnerable to changes in monetary policy and financial conditions. The recent ...

The US government has been borrowing and spending as if interest rates would be low forever. Now the Piper wants a word. In hindsight, it was obvious it wouldn't last. Low interest rates — the result of shifts in the global economy, economic stability, low inflation and monetary policy — couldn't stay at zero forever. But many people behaved ...

As a condition of providing extra funds to support the existing benefit, legislators should let younger workers opt for a better-focused safety net. In his 2024 budget proposal, President Biden promised to oppose any cuts to Social Security — pledging to defend the current structure of the program. The past four decades have seen enormous ...

The fallout from Silicon Valley Bank and other institutions adds to the headwinds for economic growth. The sudden loss of confidence by depositors in some US banks is causing many to focus on the scope for financial contagion and the needed policy responses. What should not be overlooked is the other, and slower, contagion channel in play — ...

WASHINGTON – Lapses at the bank will be a focus as a top Federal Reserve official testifies to House and Senate committees this week. The nation's top financial regulators will face a grilling from lawmakers on Tuesday over the collapse of Silicon Valley Bank as they push to understand why the firm was allowed to grow so rapidly and build up ...

Is there a war on appliances? Or is it a war on you? I’d tell you to keep your cool, but that’s going to be hard when Team Biden takes away your air conditioner. And the Biden administration certainly has an appetite for regulating household appliances in a way that seems calculated to make your life worse. Many readers will remember the ...

Some lawmakers blame a bipartisan 2018 reform law for the bank’s collapse. That’s so nonsensical, it isn’t even wrong. Congress will hold hearings this week on lessons from the failure of Silicon Valley Bank. Some lawmakers are calling for the financial stampede that brought down SVB to be followed by a political stampede of new, restrictive ...

The Chinese government may be using its shipping technology as a spy tool. For more than 15 years, the Chinese Communist Party (CCP) has developed an elaborate espionage campaign to gather insight on American businesses, strategic assets, and supply-chain weak links. The goal: to gain a competitive foothold it can leverage against the ...

WASHINGTON – The Federal Reserve’s top bank cop blamed Silicon Valley Bank’s leaders, while previewing the cental bank’s review of its faulty oversight. The Federal Reserve's vice chair for supervision blamed Silicon Valley Bank's demise on poor internal management and excessive risk-taking and detailed the steps that Fed supervisors took ...

Sen. Elizabeth Warren (D-Mass.) wants to oust Jerome Powell. Last week she went after the Federal Reserve chair, saying in an interview on NBC's "Meet the Press": "My views on Jay Powell are well-known at this point. He has had two jobs. One is to deal with monetary policy. One is to deal with regulation. He has failed at both." It is hard ...

Nearly half of Americans say the healthcare system is failing them. Six in ten report having had a bad healthcare experience. About half of patients say they have trouble affording health care–even those who are insured. All told, Americans' satisfaction with their healthcare system hit a new low ...

Discussions about how to make banks safer for customers should also include how to make them more inclusive for the 25 million Americans that rely on risky alternative financial service providers. Since the failure of Silicon Valley Bank, we have heard a lot about deposit insurance and whether our money really is safe being left at a bank. ...

Using monetary policy to support an already-stabilizing financial system would be a mistake. Amid lingering inflation and financial-market turmoil, the Federal Reserve raised its interest-rate target to 5 percent on Wednesday. To their credit, Chairman Powell and the FOMC (Federal Open Market Committee) were evidently more worried about ...

President Biden belatedly released his fiscal year 2024 budget this month, but his proposals do little to actually make the Medicare program sustainable for future generations. After weeks of back and forth with congressional Republicans, with each side accusing the other of supporting Medicare cuts, Biden's plan to shore up the problem relies ...

Less US crude is unaccounted for, but data collectors are still getting shortchanged. At several points last year, the US government was unable to account for about one-in-10 barrels of oil the country either produced or consumed. Don't get me wrong: the barrels were there; they existed. But statisticians couldn't determine whether ...

Bond investors are having fun again. The 10-year US Treasury bond yield peaked last year at 4.25% on October 24. It was down to 3.38% on Friday. Most of this decline occurred since the start of the current banking crisis on March 9 (chart). Bond investors have been waiting for something to break in the financial system since last summer when ...

Did the San Francisco Fed put political causes above financial risks? Congress will hold hearings this week on the role of regulators in recent bank failures, and let’s hope they’re instructive. One question that deserves probing is whether misplaced priorities at the San Francisco Federal Reserve Bank caused it to overlook financial risks ...

Thanks to interest-rate risk exposure, the central bank will soon have negative equity capital. Like all central banks, the Federal Reserve was designed to make money for the government from its monopoly on issuing currency. The Fed did generate profits, which it sent to the Treasury, every year from 1916 on—until last fall. In a ...

Remember those black clouds hanging over Europe last fall? Terrifying warnings of natural gas shortages, death-inducing winter blackouts, war spreading westward, endless stagflation – and, of course, recession. It never happened. Instead, Eurozone stocks have soared by nearly a third since September’s low. French, Italian and Spanish markets ...

Before the 1970s currency markets were near non-existent. There was really no reason for them as currencies were concepts, or measures of value. The dollar was defined as 1/35th of a gold ounce, and currencies around the world were pegged to the dollar. About the gold exchange standard that existed, critics and supporters alike can save ...

A maximalist culture of bailouts and state support is bloating and thereby destabilising the global financial system. As bank runs spread, it has become clear that anyone who questions a government rescue for those caught underfoot will be tarred as a latter-day liquidationist, like those who advised Herbert Hoover to let businesses fail after ...

The Texas Miracle–a state now with 30 million inhabitants, putting the heat on California as the greatest place people have ever flocked to in pursuit of the American Dream. For years, Texas has been the picture of mass prosperity. Homeownership within everyone's grasp (and a stellar housing stock). Jobs galore. Entrepreneurial ...

The US banking crisis entered its third week with no stability in sight. While Federal regulators' decision to insure all deposits at Silicon Valley Bank and Signature Bank ended the deposit flight from those entities, the crisis spread to other institutions, e.g., First Republic Bank, which hold long-maturity loans and mortgage-backed ...

Just as he owns the inflation stalking the middle class."Most Americans doubt their children will be better off." This is the headline on a major Wall Street Journal article today about a WSJ-NORC poll. The subhead reads: "Dim view of economy underpins pessimism about future and record-low happiness in U.S." NORC, by the way, is the University ...

Goldman Sachs says the uncapped tax credits will cost three times what Democrats claimed. The Inflation Reduction Act may go down as one of the greatest confidence tricks on taxpayers in history. Democrats used accounting gimmicks to claim the partisan law would reduce the budget deficit. But now a Goldman Sachs report projects its myriad ...

The Federal Open Market Committee's (FOMC) decision to boost the federal funds rate by 25 basis points represents the first major test of its commitment to curtail inflation. The Fed's challenge was to demonstrate its resolve while maintaining confidence in the financial system amid the sudden collapse of Silicon Valley Bank (SVB) and the ...

BEIJING – Today, we are witnessing a potentially lethal interplay between two sources of tension: a financial crisis, reflected in the failure of Silicon Valley Bank, and a geostrategic crisis, reflected in the deepening cold war between the United States and China. The outcome is likely to be greater than the sum of the parts. No two crises ...

Intelligence can make you happier, but only if you see it as more than a tool to get ahead. "Happiness in intelligent people is the rarest thing I know," an unnamed character casually remarks in Ernest Hemingway's novel The Garden of Eden. You might say that this is a corollary of the much more famous "Ignorance is bliss." The latter ...

Industrial policy and subsidies are nothing new and can be useful. But shutting off from the world will have consequences. Beginning with the Trump administration, and accelerating under the Biden administration, U.S. trade and industrial policy has prioritized relocating manufacturing production back to the United States. For all ...

Trade and financial flows have fallen well below their peaks, and poorer countries will bear the brunt. Globalization was meant to bring the world closer together, enmeshing advanced and developing economies in a web of mutually beneficial economic and financial linkages. From about the mid-1980s, trade and financial flows between ...

Wild swings in the Treasury market are unlike anything many investors today had seen. They’re also potentially warning of a recession. In the typically tame market for government bonds, investors have been left reeling from some of the most chaotic trading conditions they have ever seen, entrenching concerns about the broader economy since ...