Timelines of the Global Financial Crisis

The Federal Reserve Bank of New York has a website with two timelines on policy responses to the global financial crisis.

1. Financial Turmoil Timeline (showing market events, Fed policy actions and other policy actions)
2. International Responses to the Crisis Timeline (showing bank guarantees, liquidity and rescue interventions, "unconventional" monetary policy and other market interventions.

Thanks go to Manfred Jäger @ Institut der deutschen Wirtschaft Köln for these links.

PS: And here the same from the Bank of England: Timeline of Crisis Events.

Collateral damage of the financial crisis: US antitrust law?

George L. Priest, professor of law & economics at Yale Law School and antitrust specialist, sees the Obama administration throwing "... a bomb at modern antitrust law". This is the punchline of his article The Justice Department's Antitrust Bomb in the Wall Street Journal. From the article:

Assistant Attorney General for Antitrust Christine Varney claims that the Justice Department can aid economic recovery by prosecuting businesses that have been successful in gaining large market shares. In her announcement last month she argued that "many observers agree" that our current recession reflects "a failure of antitrust" and "inadequate antitrust oversight." ...

What does Ms. Varney propose as an alternative approach? [...] Her basic proposal is to transform American antitrust law to more closely resemble that of Europe. She states that American antitrust policies have "diverged too frequently" from those of the Europe, and that "[w]e will focus our efforts on working through our previously divergent policies regarding single-firm conduct and pursuing vigorous enforcement on the [monopolization] front." more...

Professor Priest disagrees:

This is a huge mistake. The principal reasons American and European approaches to antitrust diverge are that the operative legal standards are different and that the Europeans have not adopted a tradition of rigorous economic analysis. [...] In the U.S. -- Ms. Varney's views aside -- success in competition is rewarded. In Europe it is suspect [...] more...

Strong stuff!

Economics in One Easy Lesson

This is a short piece from slope of hope, a financial markets blog focused on "technical analysis". It begins like this:

Heidi is the proprietor of a bar in Berlin. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. more...

In a nutshell

Subprime bubble --> Financial crisis --> Credit crunch --> Recession --> Stimulus package --> Buy American!

And what's next?

Update on 30. January: Now it's almost official -- Buy American stimulus ...

Worried about the crisis? Have some inflation!

Two renowned US economists are arguing that inflation is the best way to combat the financial crisis. In their article on the webpages of the Peterson Institute for International Economics they argue that inflation (i) is preferable to deflation and (ii) in times of crisis has many advantages of its own. One of the advantages - according to them - is that inflation in the US induces a depreciation of the US dollar vis-à-vis the euro and thus effectively forces the ECB to engage in a more expansionary monetary policy (whereas in the case of a fiscal stimulus in the US the Europeans would free ride on the US expansion).

If this is a representative opinion among US economists then within the next few months we will see a huge fiscal expansion in the US (announced: fiscal stimulus of up to $700bn) accompanied by a massively expansionary monetary policy deliberately aimed at generating inflation.

My recommendation to the rest of the world: Tighten your seat belts!

PS: One of the two authors is Simon Johnson.