links for 2008-03-15
Post-Meltdown After-Action Report: The Housing Market, the Tasks of the Fed and the Treasury, and Economists' Reputational Bets

Paul Krugman's Weblog Is the in Place to Be...

Right now I could quote from and comment on Paul Krugman's weblog all day. It is, today, the best place to go for rapid, timely, yet economically-sophisticated analysis of the Panic of 2008:

Paul Krugman:

Paul Krugman - Op-Ed Columnist - New York Times Blog Many people still don't quite get the Fed's problem.... One big part... is that cuts in the interest rates they can control aren't translating into reductions in the interest rates that matter for the economy... the most important channel through which monetary policy affects the economy is housing -- and the Fed's cuts have not succeeded in producing easier mortgage credit because the financial system has been falling apart. But... there is another important channel for monetary policy: low interest rates tend to cause a low dollar, which is good for net exports.... So the second panel in the graphic doesn%u2019t show a failure of policy -- it shows the one area in which monetary policy is working!... [I]f a weak dollar wasn't helping net exports, we'd be in much worse shape than we are.

Indeed. I find myself praying daily for a small run on the dollar myself...