Depression redux–Updated

Fantastic new research from Barry Eichengreen and Olivier Accominotti over at VoxEU comparing the ongoing Recession/financial crisis in Europe to the Great Depression. The key driver of the crisis on both occasions was a large capital flow from one half of the continent to another, followed by a sudden stop and quick flow reversal. While this fact has certainly been acknowledged over the past several years, the authors felt that this acknowledgment had been primarily anecdotal, and sought to add rigor to our understanding of capital flows and their impact on the current crisis/Great Depression by flushing out a more thorough analysis of the determinants of the capital reversals.

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Questionable Legacy

Via Mark Thoma at Economists View:

… If [President Obama] can get them to take him up on his repeated offer to cut even more and especially the vital social security programs (when they actually need to be raised), he will have fulfilled his Grand Bargain agenda. He certainly seems prepared to grant that deficit reduction remains extremely important and bringing it down is one of his proudest a accomplishments. He can’t wait to do more of it.

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Fed succession

Breaking news on the Fed succession front–Larry Summers has withdrawn his name from consideration for the next Fed chair. At this point, that means that Yellen has to be the frontrunner–however, with the proxy political battle that has been playing out between Yellen and Summers over the last couple months, its entirely possible that the Obama administration will decide to go in an entirely different direction. If that’s the case, perhaps we can expect someone like Roger Ferguson or Stan Fisher.