Over the Cliff: from the Subprime to the Global Financial Crisis
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1 My Plan to Cancel Student Loan Debt on Day One of My Presidency We're Facing a Student Loan Crisis
My Plan to Cancel Student Loan Debt on Day One of My Presidency We’re facing a student loan crisis -- one that’s holding back our economy and crushing millions of American families. I have already proposed bold steps to broadly cancel student loan debt, provide universal tuition free public two- and four-year college and technical school, ban for- profit colleges from receiving federal aid, and help end racial disparities in college enrollment and resources. But the Department of Education already has broad legal authority to cancel student debt, and we can’t afford to wait for Congress to act. So I will start to use existing laws on day one of my presidency to implement my student loan debt cancellation plan that offers relief to 42 million Americans -- in addition to using all available tools to address racial disparities in higher education, crack down on for-profit institutions, and eliminate predatory lending. I spent my career studying why so many hard-working middle-class families were going broke. I discovered that they weren’t reckless or irresponsible -- they were being squeezed by an economy that forced them to take on more debt to cling to their place in America’s middle class. Student debt is no different: for decades, students have worked hard and played by the rules. They took on loans on the promise that a college education would justify their debt and provide a ticket to the middle class. But our country’s experiment with debt-financed education went terribly wrong: instead of getting ahead, millions of student loan borrowers are barely treading water. -
Quantitative Easing and Inequality: QE Impacts on Wealth and Income Distribution in the United States After the Great Recession
University of Puget Sound Sound Ideas Economics Theses Economics, Department of Fall 2019 Quantitative Easing and Inequality: QE impacts on wealth and income distribution in the United States after the Great Recession Emily Davis Follow this and additional works at: https://soundideas.pugetsound.edu/economics_theses Part of the Finance Commons, Income Distribution Commons, Macroeconomics Commons, Political Economy Commons, and the Public Economics Commons Recommended Citation Davis, Emily, "Quantitative Easing and Inequality: QE impacts on wealth and income distribution in the United States after the Great Recession" (2019). Economics Theses. 108. https://soundideas.pugetsound.edu/economics_theses/108 This Dissertation/Thesis is brought to you for free and open access by the Economics, Department of at Sound Ideas. It has been accepted for inclusion in Economics Theses by an authorized administrator of Sound Ideas. For more information, please contact [email protected]. Quantitative Easing and Inequality: QE impacts on wealth and income distribution in the United States after the Great Recession Emily Davis Abstract In response to Great Recession, the Federal Reserve implemented quantitative easing. Quantitative easing (QE) aided stabilization of the economy and reduction of the liquidity trap. This research evaluates the correlation between QE implementation and increased inequality through the recovery of the Great Recession. The paper begins with an evaluation of the literature focused on QE impacts on financial markets, wages, and debt. Then, the paper conducts an analysis of QE impacts on income, household wealth, corporations and the housing market. The analysis found that the changes in wealth distribution had a significant impact on increasing inequality. Changes in wages were not the prominent cause of changes in GINI post-recession so changes in existing wealth appeared to be a contributing factor. -
The Financial and Economic Crisis of 2008-2009 and Developing Countries
THE FINANCIAL AND ECONOMIC CRISIS OF 2008-2009 AND DEVELOPING COUNTRIES Edited by Sebastian Dullien Detlef J. Kotte Alejandro Márquez Jan Priewe UNITED NATIONS New York and Geneva, December 2010 ii Note Symbols of United Nations documents are composed of capital letters combined with figures. Mention of such a symbol indicates a reference to a United Nations document. The views expressed in this book are those of the authors and do not necessarily reflect the views of the UNCTAD secretariat. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Material in this publication may be freely quoted; acknowl edgement, however, is requested (including reference to the document number). It would be appreciated if a copy of the publication containing the quotation were sent to the Publications Assistant, Division on Globalization and Development Strategies, UNCTAD, Palais des Nations, CH-1211 Geneva 10. UNCTAD/GDS/MDP/2010/1 UNITeD NatioNS PUblicatioN Sales No. e.11.II.D.11 ISbN 978-92-1-112818-5 Copyright © United Nations, 2010 All rights reserved THE FINANCIAL AND ECONOMIC CRISIS O F 2008-2009 AND DEVELOPING COUN T RIES iii CONTENTS Abbreviations and acronyms ................................................................................xi About the authors -
Uncertainty and Hyperinflation: European Inflation Dynamics After World War I
FEDERAL RESERVE BANK OF SAN FRANCISCO WORKING PAPER SERIES Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER June 2018 Working Paper 2018-06 https://www.frbsf.org/economic-research/publications/working-papers/2018/06/ Suggested citation: Lopez, Jose A., Kris James Mitchener. 2018. “Uncertainty and Hyperinflation: European Inflation Dynamics after World War I,” Federal Reserve Bank of San Francisco Working Paper 2018-06. https://doi.org/10.24148/wp2018-06 The views in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of the Federal Reserve Bank of San Francisco or the Board of Governors of the Federal Reserve System. Uncertainty and Hyperinflation: European Inflation Dynamics after World War I Jose A. Lopez Federal Reserve Bank of San Francisco Kris James Mitchener Santa Clara University CAGE, CEPR, CES-ifo & NBER* May 9, 2018 ABSTRACT. Fiscal deficits, elevated debt-to-GDP ratios, and high inflation rates suggest hyperinflation could have potentially emerged in many European countries after World War I. We demonstrate that economic policy uncertainty was instrumental in pushing a subset of European countries into hyperinflation shortly after the end of the war. Germany, Austria, Poland, and Hungary (GAPH) suffered from frequent uncertainty shocks – and correspondingly high levels of uncertainty – caused by protracted political negotiations over reparations payments, the apportionment of the Austro-Hungarian debt, and border disputes. In contrast, other European countries exhibited lower levels of measured uncertainty between 1919 and 1925, allowing them more capacity with which to implement credible commitments to their fiscal and monetary policies. -
Mapping Exploitation
MAPPING EXPLOITATION Examining For-Profit Colleges as Financial Predators in Communities of Color July 2021 PROTECTBORROWERS.ORG MAPPING EXPLOITATION 2021 Table of Introduction 3 Contents Student Debt is a Crisis for Black and Latino Borrowers and Their Communities 5 For-Profit Colleges are Another Example of Firms Engaging in “Predatory Inclusion" 9 For-Profit Colleges and the Geography of Financial Predation 10 For-Profit Schools Target Communities of Color with Predatory Products That Produce Suboptimal Outcomes 13 Mapping For-Profits in the Midwest 14 Recommendations 26 Conclusion 31 Endnotes 32 2 MAPPING EXPLOITATION 2021 Introduction The country is in the midst of an unprecedented student debt crisis with 45 million borrowers collectively owing more than $1.7 trillion in student debt. Student loan borrowers have been sold the narrative that education is the key to social mobility—that it is “the great equalizer.”1 Meanwhile, the rising cost of higher education has brought with it rising levels of student debt—debt that is often excused or ignored as a personal shortcoming, the result of individual choices rather than a broad array of deep systemic failures.2 These parallel trends perpetuate the narrative that student loan borrowers are not entitled to assistance or that their distress does not merit policymakers’ attention. However, as we have seen time and time again, the vision of higher education as the key to individual opportunity and student debt as “good debt” has consistently failed to account for a host of interconnected -
October 19, 1987 – Black Monday, 20 Years Later BACKGROUND
October 19, 1987 – Black Monday, 20 Years Later BACKGROUND On Oct. 19, 1987, “Black Monday,” the DJIA fell 507.99 (508) points to 1,738.74, a drop of 22.6% or $500 billion dollars of its value-- the largest single-day percentage drop in history. Volume surges to a then record of 604 million shares. Two days later, the DJIA recovered 289 points or 16.6% of its loss. It took two years for the DJIA to fully recover its losses, setting the stage for the longest bull market in U.S. history. Date Close Change Change % 10/19/87 1,738.70 -508.00 -22.6 10/20/87 1,841.00 102.30 5.9 10/21/87 2,027.90 186.90 10.2 Quick Facts on October 11, 1987 • DJIA fell 507.99 points to 1,738.74, a 22.6% drop (DJIA had opened at 2246.74 that day) o Record decline at that time o Friday, Oct. 16, DJIA fell 108 points, completing a 9.5 percent drop for the week o Aug. 1987, DJIA reached 2722.42, an all-time high; up 48% over prior 10 months o Today, DJIA above 14,000 • John Phelan, NYSE Chairman/CEO -- Credited with effective management of the crisis. A 23-year veteran of the trading floor, he became NYSE president in 1980 and chairman and chief executive officer in 1984, serving until 1990 NYSE Statistics (1987, then vs. now) 1987 Today (and current records) ADV - ytd 1987 (thru 10/19): 181.5 mil ADV – 1.76 billion shares (NYSE only) shares 10/19/1987: 604.3 million shares (reference ADV above) 10/20/1987: 608.1* million shares (reference ADV above) Oct. -
QE Equivalence to Interest Rate Policy: Implications for Exit
QE Equivalence to Interest Rate Policy: Implications for Exit Samuel Reynard∗ Preliminary Draft - January 13, 2015 Abstract A negative policy interest rate of about 4 percentage points equivalent to the Federal Reserve QE programs is estimated in a framework that accounts for the broad money supply of the central bank and commercial banks. This provides a quantitative estimate of how much higher (relative to pre-QE) the interbank interest rate will have to be set during the exit, for a given central bank’s balance sheet, to obtain a desired monetary policy stance. JEL classification: E52; E58; E51; E41; E43 Keywords: Quantitative Easing; Negative Interest Rate; Exit; Monetary policy transmission; Money Supply; Banking ∗Swiss National Bank. Email: [email protected]. The views expressed in this paper do not necessarily reflect those of the Swiss National Bank. I am thankful to Romain Baeriswyl, Marvin Goodfriend, and seminar participants at the BIS, Dallas Fed and SNB for helpful discussions and comments. 1 1. Introduction This paper presents and estimates a monetary policy transmission framework to jointly analyze central banks (CBs)’ asset purchase and interest rate policies. The negative policy interest rate equivalent to QE is estimated in a framework that ac- counts for the broad money supply of the CB and commercial banks. The framework characterises how standard monetary policy, setting an interbank market interest rate or interest on reserves (IOR), has to be adjusted to account for the effects of the CB’s broad money injection. It provides a quantitative estimate of how much higher (rel- ative to pre-QE) the interbank interest rate will have to be set during the exit, for a given central bank’s balance sheet, to obtain a desired monetary policy stance. -
12. the Recent Crisis – and Recovery – of the Argentine Economy: Some Elements and Background
12. The Recent Crisis – and Recovery – of the Argentine Economy: Some Elements and Background Arturo O’Connell ______________________________________________________________ INTRODUCTION The Argentine crisis could be examined as one more crisis of the developing countries – admittedly a star pupil that had received praise from many sides – hit by the vagaries of the international financial markets and/or its own policy mistakes. To a great extent that is a line of argument that could provide some illumination. However, it could be even more interesting to examine the peculiarities of the Argentine experience – always in that general context –that have made it such an intractable case for normal medication. Not only would it be best to pin down those peculiarities and their consequences, but also it is necessary to understand that they were not just a result of the eccentricities of some people in some far-off Southern end of the world. Finance, both external and domestic, is one essential part of the story. Argentina became one of the most highly liberalized financial systems in the world. Capital could freely flow in and out without even clear registration demands; big firms profited from such a system by being able to finance themselves – at cheaper financial costs – in the international market at the same time that wealthy families chose to hold a significant proportion of their liquid assets abroad. The domestic banking system was opened to foreign entry to the point of not requiring the habitual reciprocity with third countries and a large and increasing proportion of the operations became denominated in foreign currency. To build up confidence in the local currency a hard peg to the US dollar was instituted by law rather than by Executive Order and the Central Bank became a mere currency board issuing currency at the legally determined rate only against foreign exchange. -
Bubbles, Manias and Market Failures
7 February 2019 Bubbles, Manias and Market Failures PROFESSOR D’MARIS COFFMAN transcribed by Mr Imad Uddin Ahmed Thank you all, it’s a great honour to be here. This is actually my second time lecturing in this hall. I was first here about 5 years ago in 2013 when I was talking about something else entirely. I’m thrilled to be back, and I would like to thank Michael Mainelli, who is not here, for in fact convincing me to do this for a second time. Tonight, I’ll talk about bubbles, manias and market failures and particularly about the unintended consequences of regulatory responses to these events. And I think when you begin talking about the subject, it’s almost imperative that you start with Tulipmania which is the paradigmatic early-modern financial crisis. Some of you may recognise this wonderful print from 1637/38 by Peter Nolpe which shows a fool’s cap in which people are playing a gambling game that was played in the inns near the flower markets. It was a kind of auction game, bit of a spread-betting game in which they bid up the price of tulips. And this print shows the devastation that Tulipmania was supposed to have caused to the morals and the economic welfare of the Dutch republic. Now most of when we actually see copies of this print, don’t see the copies from the 1636-37 but rather recycled copies from the 1720s in a much different context. We’ll talk in a moment about that context. -
HOW DID QUANTITATIVE EASING REALLY WORK? a New Methodology for Measuring the Fed’S Impact on Financial Markets
HOW DID QUANTITATIVE EASING REALLY WORK? A New Methodology for Measuring the Fed’s Impact on Financial Markets Ramin Toloui Stanford Institute for Economic Policy Research [email protected] SIEPR Working Paper No. 19-032 November 2019 ABSTRACT This paper introduces a new methodology for measuring the impact of unconventional policies. Specifically, the paper examines how such policies reshaped market perceptions of how the Fed would behave in the future—not merely the expected path for policy rates, but how the central bank would adjust that path in response to different combinations of future inflation and growth. In short, it studies how quantitative easing affected investor beliefs about the future policy reaction function. The paper (1) proposes a novel model of market expectations for the central bank’s future policy reaction function based on the Taylor Rule; (2) shows that empirical estimates of the model exhibit structural breaks that coincide with innovations in unconventional policies; and (3) finds that such policy innovations were associated with regime shifts in the behavior of 10-year U.S. Treasury yields, as well as unusual performance in risk assets such as credit spreads and equities. These findings provide evidence that a key causal channel for unconventional policies was via their impact on market expectations for the Fed’s future policy reaction function. These shifts in expectations, in turn, appear to have had larger, more persistent, and more pervasive effects across financial markets than found in previous studies. Monetary economics today is obsessed with balance sheets—and rightfully so. More than ten years after the global financial crisis, policy interest rates remain exceptionally low in much of the industrialized world. -
The Bulgarian Financial Crisis of 1996/1997
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Berlemann, Michael; Nenovsky, Nikolay Working Paper Lending of first versus lending of last resort: The Bulgarian financial crisis of 1996/1997 Dresden Discussion Paper Series in Economics, No. 11/03 Provided in Cooperation with: Technische Universität Dresden, Faculty of Business and Economics Suggested Citation: Berlemann, Michael; Nenovsky, Nikolay (2003) : Lending of first versus lending of last resort: The Bulgarian financial crisis of 1996/1997, Dresden Discussion Paper Series in Economics, No. 11/03, Technische Universität Dresden, Fakultät Wirtschaftswissenschaften, Dresden This Version is available at: http://hdl.handle.net/10419/48137 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, -
Interview of George Mehales About the Stock Market Crash of 1929, December 1938
Interview of George Mehales about the Stock Market Crash of 1929, December 1938 One day, one of my customers showed me how much money he was making in the market. I had never even thought about the stock market before. For a few days, I looked at the market page in the newspaper. It looked good to me, and I bit with what you folks call 'hook, line and sinker.' All the money I took in, I put into stocks. The first day of October in 1929 made me feel like I was rich. The stocks I bought had gone up and up. I sold some of them and bought others. I often thought about what my mother had said and that was “You'll get rich in America someday!' I should have paid for my fixtures, but I figured I could pay them any time. You might think I would have known better, but I didn't. I figured I could pay my debts any time, and I just let them ride. Trouble hit me hard during the last day of October of that year. I had become so interested with the market that I let my own business go down. I wasn't there half the time. I need my own place of business as a place to hang around in. Business dropped off, but I didn't care “cause I was making plenty money in the market. During the last days of October, my stocks began to drop. I was gambling on the margin. My brother called me and told me I would have to put up more cash.