Crisis Chronicles: The South Sea Bubble of 1720—Repackaging Debt and the Current Reach for Yield
In 1720, the South Sea Company offered to pay the British government for the right to buy the national debt from debtholders in exchange for shares backed by dividends to be paid from the company’s debt holdings and South Sea trade profits.
(Unmet) Credit Demand of American Households
Basit Zafar, Max Livingston, and Wilbert van der Klaauw One of the direct effects of the 2008 financial crisis on U.S. households was a sharp tightening of credit. Households that had previously been able to borrow relatively freely through credit cards, home equity loans, or personal loans suddenly found those lines closed off—just when they […]
Japan’s Missing Wall of Money
The Bank of Japan announced an open-ended asset purchase program in January 2013 and an unexpectedly ramped-up version of the program was implemented in early April.
Long Island’s Economy Back on Track after Sandy
In late October last year, Superstorm Sandy devastated and disrupted much of the tri-state region, including a large swath of Long Island.
Historical Echoes: Passbooks and Hand Grenades
The Postal Savings System began in 1911 as a means for communities without banks to allow its citizens access to basic banking services.
Dealer Balance Sheet Capacity and Market Liquidity during the 2013 Selloff in Fixed‑Income Markets
Tobias Adrian, Michael J. Fleming, Jonathan E. Goldberg, Morgan Lewis, Fabio M. Natalucci, and Jason J. Wu Long-term interest rates hit record-low levels in 2012 but have since increased substantially. As discussed in an earlier post, the sharpest increase occurred between May 2 and July 5 of this year, with the ten-year Treasury yield rising from 1.63 percent […]
A Look at Bank Loan Performance
U.S. banks experienced a rapid rise in loan delinquencies and defaults during the 2007-09 recession, driven by rising unemployment and falling real estate prices, among other factors.
Historical Echoes: Throwing Coins into a Fountain—Who Is Getting Paid?
Amy Farber Do you throw coins into a fountain when you see that others have done so? A comprehensive and thoughtful student project on wishing well use in Southern California has been posted on the internet by University of California, Irvine, anthropology professor Bill Maurer. The 2006 project bases its findings on interviews of people […]
Twenty‑Eight Money Market Funds That Could Have Broken the Buck: New Data on Losses during the 2008 Crisis
Marco Cipriani, Michael Holscher, Antoine Martin, and Patrick E. McCabe During the financial crisis in 2008, just one money market fund (MMF) “broke the buck”—that is, its share price dropped below one dollar. The Reserve Primary Fund announced on September 16 that the value of its shares had dropped to 97 cents. As we discussed in […]
What’s News?
Linda S. Goldberg Economic news moves markets. Most analyses find that economic news is incorporated quickly (within minutes) into asset prices, with some measurable persistence of these effects, and with some spillovers across national borders. Some types of announcements—for example, U.S. nonfarm payrolls announcements—generate much larger asset price responses than others. Generally, news that is […]