2008 Financial Crisis Under the Magnifying Glass

It may be almost a decade after the 2008 financial crisis shook the US economy, but economists and financial managers are still trying to snuff out the causes of this pandemic. The idea of a “housing bubble” has been used to describe the confusion and ignorance around the risks of the housing market leading up to the collapse. This concept connects many different pieces within the US housing market, from borrowers to lenders to big players on Wall Street. But it is difficult for economists to pinpoint one key cause of this crisis. So the magnifying glass has been placed Continue reading 2008 Financial Crisis Under the Magnifying Glass

Anecdotes at the Federal Reserve

The Federal Reserve occupies a special pedestal of authority and competence in the arena of governmental bodies charged with economic policy. Compared to Congress, it acts with amazing unity and speed. Moreover, compared to Congresses’s shortsighted and often political settlements, the Federal Reserve tends to make calculated, strategic decisions with an close eye to their long-term ramifications.The tendency of investors and analysts to hang on very last word of the Chairman’s public statements evidences the delicately crafted nature of its policy. However, in moments of crisis, even the ordered, empirical world of the Fed policy-making can be turned upside down. Transcripts of Federal Open Market Committee Continue reading Anecdotes at the Federal Reserve

A Glimpse into the Federal Reserve

The Federal Reserve recently released a transcript of their Open Market Committee (FOMC) meeting in September 16, 2008. The FOMC oversees the Fed’s “Open Market Operations,” purchase and sale of bonds; the Fed controls our money supply through this mechanism. It makes sense for the operational arm of the Fed to convene bright and early—8:30am—that day. This meeting took place in the thick of the financial crisis. Chairman Bernanke opened the session: “Good morning, everybody. Sorry for the late beginning. The markets are continuing to experience very significant stresses this morning, and there are increasing concerns about the insurance company AIG.” The Continue reading A Glimpse into the Federal Reserve