The $1 billion federal “Cash for Clunkers” program that will pay consumers up to $4,500 for trading in aging gas-guzzlers for new, more fuel efficient models could be a big bust. Macroeconomic Advisers just completed a study on the program and found that it will bring forward future sales that would have happened anyway (though that could be good for cash-strapped companies). This is very similar to what economists have found with natalist policies that try to incentivize women to have more kids:
Nouriel Roubini speaks (or, rather, writes in Forbes):
The other important aspect of the labor market is that if the unemployment rate is going to peak around 11% next year, the expected losses for banks on their loans and securities are going to be much higher than the ones estimated in the recent stress tests. You plug an unemployment rate of 11% in any model of loan losses and recovery rates and you get very ugly losses for subprime, near-prime, prime, home equity loan lines, credit cards, auto loans, student loans, leverage loans and commercial loans–much bigger numbers than what the stress tests projected.
From the WSJ:
Treasury Secretary Timothy Geithner is expected to play a key role in advising President Barack Obama on whether to reappoint Mr. Bernanke. Mr. Geithner has worked closely both with Mr. Bernanke and with the leading alternative for the powerful post — Lawrence Summers, the former Treasury secretary, who is currently the president’s top economic adviser.
Very interesting (via Politico):
A Public Policy Polling survey in Virginia found Obama’s approval and disapproval numbers effectively tied, with independents disapproving of the president’s job performance, 52 percent to 38 percent. “That is fairly consistent with all our polling around the country — Obama tends to be really well-liked personally, but he’s starting to lose a majority of the independents,” said Public Policy’s Dean Debnam. Democrats have “had long enough in some voters’ minds that they’re getting blame for nothing happening, and Republicans are scaring them around health care and tax increases.”
Some interesting conclusions from a Minneapolis Federal Reserve Bank study of how country’s deal with financial crises. The White House might want to take a peak at the whole thing. Here is a bit of it (bold is mine):