What we’re reading (10/10)
“Nobel Prize In Economics Winners Include Former Fed Chair Ben Bernanke” (Wall Street Journal). “A quiet academic who spent most of his career studying the Great Depression and central banking at Princeton University and the Stanford Graduate School of Business, Mr. Bernanke rose to the forefront of policy-making just as the U.S. was entering a potential replay of the subject he mastered from history books. Historians now credit Mr. Bernanke for averting an economic calamity by quickly devising aggressive new monetary policies—rock-bottom interest rates, loans to banks and controversial bond-buying programs—during and after a financial crisis that started in 2007 and spanned nearly two years.”
“The Economic Contributions Of Ben Bernanke” (Marginal Revolution). “Bernanke’s doctoral dissertation was on the concepts of option value and irreversible investment. Modest increases in business uncertainty can cause big drops in investment, due to the desire to wait, exercise “option value,” and sample more information. This work was published in the QJE in 1983. I have long felt Bernanke does not receive enough credit for this particular idea, which later was fleshed out by Pindyck and Rubinfeld. In sum, Ben is a broad and impressive thinker and researcher. This prize is obviously deserved. In my admittedly unorthodox opinion, his most important work is historical and on the Great Depression.”
“Get Ready For Some Earnings” (CNN Business). “There’s lots of anxiety swirling about a possible recession. Is Corporate America starting to get nervous, too? We’ll get a better sense this week when several top financial firms and consumer companies report third-quarter earnings.”
“‘This Is Serious’: JPMorgan’s Jamie Dimon Warns U.S. Likely To Tip Into Recession In 6 To 9 Months” (CNBC). “Dimon, chief executive of the largest bank in the U.S., said the U.S. economy was ‘actually still doing well’ at present and consumers were likely to be in better shape compared with the 2008 global financial crisis. ‘But you can’t talk about the economy without talking about stuff in the future — and this is serious stuff,’ Dimon told CNBC’s Julianna Tatelbaum on Monday at the JPM Techstars conference in London.”
“Cathie Wood Just Wrote An Open Letter To The Fed Accusing It Of Stoking ‘Deflation’ And Looking At The Wrong Economic Indicators” (Fortune). “[Wood] argues that Chair Jerome Powell & Co. are using “lagging indicators”—including employment and headline inflation—to justify tighter monetary policy when they should be using “leading indicators” such as commodity, used car, and home prices that tell a very different story.”
