Hallowe'en in the West Wing

When the ranks of advisors had thinned
Who, for rest or reward, did rescind,
One could hear, while alone,
The faint, mournful moan
Of the shifting political wind.

The departure of - and (heretofore) lack of replacements for - Office of Management and Budget Director Peter Orszag (middle), Chief of Staff Rahm Emanuel (2nd from right) and National Economic Council Director Larry Summers (back to camera) have left an eerie emptiness in the President's senior advisory group, on the Hallows' Eve before Election Day. 

Please Cry for Me, Argentina

Buenos Aires said tearful goodbyes
At Kirchner's  surprising demise,
Though some, less well bred,
Spoke ill of the dead,
In the form of new bull market highs.

The sudden death by heart attack of Argentina's ex-President Néstor Kirchner ignited a rally in Argentine stock and bond markets. Along with his now-widow, current President Cristina Fernández de Kirchner, the deceased had mapped out a political dynasty marked by heavy state intervention in the economy. His passing during an election season improves the chances of the market-friendlier opposition against Mrs. Kirchner.

Overheard at the Retirement Fund

"The mortgage-backed bonds in our pension,
A source of regret and contention,
May yet be unwound
If they're legally found
To have flouted the 'true sale' convention."

Hopes are awakening in the hearts of institutional investors that sloppy and even fraudulent practices in the origination and sale of mortgages to bond trusts may give investors legal grounds to put them back to the originating banks and thereby recoup some losses.

TIPS Under Zero

The Treas'ry's inflation-linked note
Is yielding a negative quote;
If deflation holds sway,
It's investors who pay,
Though the likelihood may be remote.   

For the first time ever, the Treasury Inflation-Protected Securities (TIPS) were issued at a negative yield: -0.55%. Since the actual interest payments will include an inflation premium (currently expected to be 1.7% per annum over the five-year life of the notes), investors will likely receive a net interest rate of something like the current 5-year T-note yield of 1.18%. However, if inflation slows, investors earn less, and may even end up paying interest to the Treasury.

Modest Proposals for Middle Class Solvency

An effective solution would feature that -
Regardless of whichever street you're at -
You're able to use
Funded vouchers to choose
A school which you'll find a good teacher at.

As lenders may oft have no scruple
To give rates that may even quadruple,
Federal usury laws
Are needed because
They'll look for a state with a loophole.

The middle class finds it's bedeviled
By strains that have bankruptcies trebled,
But it ought to be clear
The political sphere
Can again make the playing field leveled.    



This is the final installment in a week-long series of limericks based on The Two-Income Trap by Elizabeth Warren, looking at the financial problems of, and proposals to help, the American middle class.

Warren Week IV: When Bankers Prey

"Our analysis shows," said the quant,
"That the credit card client we want
Is in desperate straits
At the maximum rates;
Not the one who can pay, but who cahn't."

Fourth in a series of five limericks based on The Two-Income Trap, by Elizabeth Warren.

Note: In her book, Prof. Warren recounts a meeting she had with Citibank credit card executives, who wanted her advice on how to reduce bad debts.  She essentially recommended that they stop lending to families in obvious financial trouble; whereupon the most senior executive in the room replied: "We have no interest in cutting back our lending to these people - they are the ones who provide most of our profits."

Warren Week III: Doubling Down

In practice, a dual income stream
Is riskier than it may seem,
Since the likelihood doubles
That personnel troubles
Deliver a loss for the team.   

The risk can be limited, blessedly,  
By budgeting not so aggressively;  
Put aside someone's pay  
For a rainier day,  
When you'll have to cut back of necessity.   

Day Three of our week-long tribute to America's struggling middle class, based on The Two-Income Trap by Elizabeth Warren.

Warren Week II: Learning the Hard Way

Though it's nice to have paychecks for pooling,
Dual incomes have really been fueling
Competitive bidding
For homes that are sitting
In districts with good public schooling.

This is the second of five limericks based on The Two-Income Trap by Elizabeth Warren.

Warren Week: I

Dr. Warren has laid out a map  
In her book called The Two-Income Trap,  
To explain how la vie works,  
When he works and she works,  
To widen the middle class gap.

This week Limericks Économiques looks at the strains on middle class America through the groundbreaking work of Elizabeth Warren.

Overheard at Bank "X"

"The legal procedures we went against
In the throes of our animal sentiments
Were finally exposed
When we tried to foreclose
On homes that we never had lent against."

Overheard at a Mortgage Servicer

"Today, to the evident sorrow
Of the lot who can't pay what they borrow,
We'll discreetly foreclose
On a hundred châteaux,
And we'll do it again come tomorrow."

Le Cri de Krugman

Dr. Krugman inveighed with ferocity:
"Without spending, the decade is lost," said he;
"With consumers defeated,
The Treasury's needed
To boost monetary velocity."

2010 Nobel Prize

A trio of really smart guys
Were bestowed a prestigious prize
For teaching the mobs
That the market for jobs
Has more friction than many surmise. 

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2010 was awarded jointly to Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides "for their analysis of markets with search frictions".  It might be added: "...in a complete upset of both the Nobel prediction market and Dr. Goose's personal pick."  But... congratulations... really.

Dr. Goose's Nobel Pick

Richard Thaler and Robert J. Shiller,
More empir'cal than Merton H. Miller,
Through the care that they gave your
Financial behavior,
Make footprints as great as Godziller.

The groundbreaking research by Thaler, of U. Chicago, and Shiller, of Yale, takes the study of finance beyond the purely rational approach embodied by 1990 Nobel Prize winner Merton Miller, into the more reality-based realm of "behavioral finance," thus having a greater impact on solving real-world problems.

Taxes: Lost in Translation

Some studious counters of beans
Compared tax rates to national means;
They concluded that Yanks
Should certainly give thanks
To pay less than those poor Europeans.

But comparison solely on tax
Disguises some relevant facts,
Since to see an MD,
Which some countries get free,
Leaves Americans flat on our backs.  

A Stimulating Viewpoint

George Soros boldly avowed:
"Obama is needlessly cowed;
He should borrow more bread
To fund roads and higher ed,
Never mind the Republican crowd."

A Non-Stimulating Argument

A program of fiscal austerity 
Is historically really a rarity; 
Though it brings, some maintain, 
Fiscal gain without pain, 
They perhaps overlook its severity.  

Harvard economics professor Greg Mankiw's blog contains links to both sides of this debate.

The Original Concept

The Social Security invention
Reflected a simple convention:
Each lady or gent
Who paid as they went
Would be funding one-ninth of a pension.

Totally Adequate Remedial Program

Politicians may argue and carp a lot  

Whether bailouts were fiscally sharp or not,  

But two years and a day  

With Depression at bay  

Should make us appreciate TARP a lot.