|Alma mater||MIT (Ph.D.)
University of Manchester (M.A.)
University of Oxford (B.A.)
|Information at IDEAS/RePEc|
Simon Johnson is a British American economist. He currently is the Ronald A. Kurtz Professor of Entrepreneurship at the Sloan School of Management at MIT. He has held a wide variety of academic and policy-related positions, including Professor of Economics at Duke University's Fuqua School of Business. From March 2007 through the end of August 2008, he was Chief Economist of the International Monetary Fund.
Among other positions he is a Research Associate at the NBER and a Research Fellow at the Centre for Economic Policy Research. He is also a member of the Congressional Budget Office's Panel of Economic Advisers. In 2006-7 he was a visiting fellow at the Peterson Institute for International Economics. He is on the editorial board of four academic economics journals.
He is an expert on financial crises in both the developed world and in emerging markets. He co-founded with James Kwak the BaselineScenario.com website chronicling the current financial crisis, to substantial critical acclaim.
In the May 2009 issue of The Atlantic Online Johnson argues that the U.S. economic recovery will fail unless the "financial oligarchy", responsible for the crisis in the first place, now using its influence to block necessary reform, is broken. The government, captured by the finance industry, seemingly "helpless, or unwilling, to act against them", is, according to Johnson, running out of time needed to prevent a true depression.
James Kwak is best known as co-founder, in September, 2008, with Simon Johnson of The Baseline Scenario a widely-cited commentary on the global financial crisis, mostly focused on the situation in the USA. James received his A.B. from Harvard University and his Ph.D. in French intellectual history from the University of California, Berkeley (b. 2007.)
He has worked as a consultant for McKinsey & Co.and later was Director of Product Marketing at Ariba, where he led product strategy and marketing for the Platform Solutions division and the Ariba Network. He was a co-founder of Guidewire Software, Inc., an independent software vendor for the property & casualty insurance industry, where he helped write the requirements for their initial product, Guidewire ClaimCenter, managed the first customer implementation project, and served as Vice President for Marketing. He is a student at Yale Law School, class of 2011, where a recent list of publications may be found.
Posted: 07 Mar 2010 04:12 PM PST
By James Kwak
David Leonhardt (hat tip Brad DeLong) discusses the risk of a double-dip recession. For Leonhardt, the main risks are the pending expiration of the fiscal stimulus and some of the Fed’s monetary stimulus measures, as well as continuing de-leveraging by households, which deprives the economy of its usual growth engine.
James Hamilton highlights a new financial conditions index developed by five economists — two from major banks and three from universities. The goal of the index is to estimate the impact of current financial variables on the future trajectory of the economy. For example, the level of current interest rates is likely to influence future economic outcomes. The paper evaluates several existing financial conditions indexes and finds that most of them show financial conditions returning to neutral in late 2009. It then describes a new index comprised of forty-four variables, which tends to do a better job of predicting economic activity than the existing indexes. (The authors admit that this is in part because they have the benefit of living through the recent financial crisis, which has shown the value of certain variables not included in previous indexes.)
Hamilton already grabbed the key chart:
The shadow banking system became increasingly important to the financial system in the past decade, and so to assess the recovery of the financial system, you need to measure its health as well. The implication is that the financial system is not in good shape to support sustained recovery at the moment, which would be another thing to add to Leonhardt’s list of worries.
Posted: 07 Mar 2010 03:50 PM PST
By James Kwak
By which I do not mean to say it is not a problem. As Paul Krugman reminds us,
The implication is that our deficits really are a serious problem. But what’s making them a serious problem is not just that they are big and getting bigger; it is that our political system seems incapable of dealing with them. So, ironically, deficit peacocks are right that the deficit is a problem, but only because they refuse to do anything about rising health care costs — since the long-term deficit problem is a health care cost problem.
Posted: 06 Mar 2010 07:26 PM PST
By James Kwak
I’ve already criticized Citigroup CEO Vikram Pandit’s testimony before the TARP Congressional Oversight Panel on Thursday, but there’s one thing I left out. Citigroup, like other banks not named Goldman Sachs, is attempting to cloak itself in a mantle of goodness. Pandit’s testimony included several bullet points discussing all the wonderful things that Citigroup is doing for ordinary Americans. For example: “In 2009, we provided $439.8 billion of new credit in the U.S., including approximately $80.5 billion in new mortgages and $80.1 billion in new credit card lending.”
There are two problems with these kinds of numbers. One is that I have no idea what to compare them to. I looked through Citigroup’s most recent financial supplement and was unable to find any numbers for “new credit,” let alone those numbers in particular. For a credit card, what does “new credit” mean? If I have no balance, and then I lose my job so I run up $20,000 on my Citi credit card, is that $20,000 in new credit? Or does new credit only include new cards issued? If so, how does it compare to credit taken away by closing people’s accounts or reducing their credit limits?
The second is that whatever Pandit says about “new credit,” it’s hard to argue that credit didn’t contract in 2009. For example, total consumer loans (p. 27) fell from $484 billion at the end of 2008 to $443 billion at the end of 2009, and total corporate loans fell from $218 billion to $177 billion, while money deposited with other banks (including the Federal Reserve) grew by $100 billion. Now, this is not all Citigroup’s fault. For one thing, they were overextended, so de-leveraging made sense from a balance sheet perspective, and for another there may have been a decline in demand for credit. But I’m still troubled by this attempt to pretend that Citi was fueling the economic recovery by stepping up lending.
Update: A friend who I believe has plenty of credit and no need for more writes in to say that the credit line on her Citibank credit card was just increased by $6,000, even though she never used more than one-third of her old credit line. She was wondering why until she realized that the $6,000 counts as “new credit” to Citi.