Very Scary Things<\/a><\/span><\/p>\n Very Scary Things
By PAUL KRUGMAN
Op-Ed Columnist
The New York Times
August 10, 2007<\/p>\n
….<\/p>\n
What\u2019s been happening in financial markets over the past few days is something that truly scares monetary economists: liquidity has dried up. That is, markets in stuff that is normally traded all the time \u2014 in particular, financial instruments backed by home mortgages \u2014 have shut down because there are no buyers.<\/p>\n
This could turn out to be nothing more than a brief scare. At worst, however, it could cause a chain reaction of debt defaults.<\/p>\n
….<\/p>\n
But when liquidity dries up, the normal tools of policy lose much of their effectiveness. Reducing the cost of money doesn\u2019t do much for borrowers if nobody is willing to make loans. Ensuring that banks have plenty of cash doesn\u2019t do much if the cash stays in the banks\u2019 vaults.<\/p>\n
….<\/p>\n
Let\u2019s hope, then, that this crisis blows over as quickly as that of 1998. But I wouldn\u2019t count on it.<\/p><\/blockquote>\n
Would someone please get him a Nobel?<\/p>\n","protected":false},"excerpt":{"rendered":"
Hopfully, Times Select will shortly be free, but I found this from last Friday by Paul Krugman elsewhere: Very Scary Things Very Scary ThingsBy PAUL KRUGMANOp-Ed ColumnistThe New York TimesAugust 10, 2007 …. What\u2019s been happening in financial markets over the past few days is something that truly scares monetary economists: liquidity has dried up. …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1261,973],"tags":[],"class_list":["post-199320","post","type-post","status-publish","format-standard","hentry","category-bubble","category-economy"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/199320"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=199320"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/199320\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=199320"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=199320"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=199320"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}