News and Commentary
Paul Krugman has published an op-ed criticizing “Wall Street snowflakes” for their opposition to Elizabeth Warren’s candidacy. Krugman’s polemics aside, he makes two important points. First, banks got off relatively easy in the wake of the financial crisis compared to regulations imposed in the 1930s. Second, while the existence of billionaires is defensible, Wall Street billionaires are among the least-deserving of their wealth.
New Research
A new paper from the National Bureau of Economic Research finds that 32% of all loans come from nonbanks. These lenders charged higher interest rates and lend to riskier borrowers, indicating a segmented commercial lending market.
A study by economists from the European Central Bank finds that after the 2016 round of stress tests for Euro Area banks, treated banks increased their capital ratios through decreased lending. This had the predictable result of increasing stability while decreasing lending with downstream effects on the economy. What’s more, stress tests that were made public further added affected banks’ desires to deleverage.
New research finds that housing speculation during the housing boom and bust exacerbated both economic growth and decline during the respective periods.
Active management is generally a foolish investment, but this is especially so when investing public employees’ retirement funds. A new study from The Journal of Alternative Investments examined New Jersey’s pension funds’ investments in alternatives, finding investments in hedge funds and private equity failed to meet benchmarks.
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