Reported by Neatorama

From this article in the LA Times (registration required)

Modest Needs exists "To prevent otherwise financially self-sufficient individuals and families from entering the cycle of poverty, when this might be avoided with a small amount of well-timed financial assistance."

Princeton political scientist Larry Bartels' soon-to-be-released new book, analyzes the difference that the President's party affiliation makes to the distribution of income during the four years of the president's term.

When a Republican president is in power, people at the top of the income distribution experience much larger real income gains than those at the bottom... when a Democrat is in power: those who benefit the most are the lower income groups....Strikingly, compared to Republicans, Democratic presidents generate higher income gains for all income groups.

So writes Harvard economics professor Dani Rodrik

That at least according to economist Tyler Cowen, who says that the falling cost of most consumer items and their increasingly short product life cycle mean that stolen goods are not worth what they once were.

Now we have non-banks. They create systemic risk...Brad DeLong

I have long believed that our global financial system had some time back outgrown in size and complexity the monitoring tools available to the banking regulators in the US and abroad. Sooner or later, it was natural that this system was going to proceed to excess and have a major systemic crisis.

This looks like it.

Out of 20 S.E.C. settlements for market timing by mutual funds, 16 involved (Elliot) Spitzer when he was New York's attorney general.

The percentage of illegally-gotten money that mutual funds had to give back in the Spitzer cases was 80 percent -- almost full restitution.

In the 4 settlements not involving Spitzer, the S.E.C. settled for 7 percent.

Why the gap?

Part of it was Spitzer's aggressiveness, but the other factor was that younger S.E.C. officials usually go work at the firms they're in charge of regulating. So, the incentive to bring the hammer is, ummm, somewhat compromised.

It seems to me that the truly important violations of the public trust are when the power we give our government officials is sold, rather than what government officials choose to buy. Yet our political scandals are too often dominated by private mistakes, rather than public misdeeds. This is why I'm more worried about what the SEC is selling than what Eliot Spitzer has been buying.

We like to think: "market -- trade -- liquidity -- good, etc.", forgetting the Glosten-Milgrom point that liquidity often rests upon the presence of fools.

If the problem is that there are too few fools in the market, it might make perfect sense for the Fed to step in as a fool of last resort. With any luck, once the Fed starts acting foolishly, other market participants will follow suit.

From Felix Salmon

Image courtesy of Calculated Risk