Clark Center Forum

by the Squam Lake Group News reports suggest that the Securities and Exchange Commission may be backing away from a reform of money-market funds. This would be a mistake. The debate over how to overhaul prime money-market funds has focused on preserving the commercial viability of these instruments while significantly lowering the threat they pose […] 

 

by Douglas J. Skinner Much has been made of Apple Inc. (AAPL)’s recent decision to begin paying regular dividends, given the company’s large free cash flow (about $1 billion a week) and cash balance (close to $100 billion). Yet, according to finance theory, stock-market investors should be indifferent to whether they receive their returns as […] 

This week’s IGM Economic Experts Panel poll statement:

Prior to the crisis, the benefits from the funding advantage that Fannie Mae and Freddie Mac had by virtue of perceived government support mostly went to their shareholders, rather than into substantially lower interest rates on residential mortgages.

 

  

There’s one prediction that can safely be made about the decision that the Supreme Court will render on the Affordable Care Act: The final vote will almost certainly be along party lines. The court’s progressive politicization in recent years is a natural reaction to the increasingly activist role it has adopted. As justices have weighed […] 

This week’s IGM Economic Experts Panel poll statements:

A) If public school students had the option of taking the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could use towards covering the costs of any private school or public school of their choice (e.g. charter schools), most would be better off.

B) The main drawback to allowing all public school students to take the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could use towards covering the costs of any private school or public school of their choice (e.g. charter schools) would be that some students would not make an active choice and would be left with much worse peers and a weaker school. 

by Robert H. Gertner The long gestation of the Consumer Financial Protection Bureau, which was mandated by the Dodd- Frank Act, is over. Now that the bureau’s chairman, Richard Cordray, is in place and it is rolling out programs, it is a good time to think about how government intervention can improve outcomes in the […] 

This week’s IGM Economic Experts Panel poll statements:

A) The average size of the 19 financial firms that just completed the Federal Reserve stress tests (i.e. the CCAR) would be substantially smaller if they did not have implicit government support.

B) The 19 financial firms that just completed the Federal Reserve stress tests (i.e. the CCAR) are big primarily because of economies of scale and scope, rather than because of implicit government support. 

Austerity isn’t working in Europe. Greece is collapsing, Italy and Spain’s output is declining, and even Germany and the U.K. are slowing down. In addition to their direct economic costs, these “austerity” measures aren’t even swiftly closing budget gaps. As incomes decline, tax revenue drops, and it becomes harder to cut spending. A downward spiral […] 

This week’s IGM Economic Experts Panel poll statement:

Changes in U.S. gasoline prices over the past 10 years have predominantly been due to market factors rather than U.S. federal economic or energy policies.