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Ben Bernanke and I went to the same graduate school. We're on opposite sides of the bailout issue. My joke is that one of us is on crack, and it's probably me. My more serious answer is in this Cato podcast.

CATEGORIES: Finance: stocks, options, etc.


COMMENTS (1 to date)
Jacob Wintersmith writes:

You point out that in spite of troubles in the financial sector the unemployment rate is only 6.1%, which is pretty average. This strikes me as an odd way to estimate the impact of failures in finance on the broader economy.

If the finance sector is partially crippled, my understanding is that this would decrease employment primarily because businesses would have difficulty obtaining loans for good projects. Thus, it seems that the employment rate would be a lagging indicator of the impact of finance problems. Wouldn't it be better to look directly at how these troubles are affecting the availability and price of credit? Or am I missing something?

Posted September 27, 2008 5:33 AM
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