The Bear Stearns Bailout, Ten Years Later


Most of us remember the pains and uncertainty around that time. But, have we learnt the lessons?

During former Federal Reserve Chairman Paul Volcker’s famous remarks to members of the Economic Club of New York after details about Bear Stearns’ rescue by JP Morgan Chase and the Fed came out ten years ago, he pointedly observed that such actions carried an “implied promise of similar action in times of future turmoil.” The Fed’s intervention is commonly remembered as the start of a cycle of institutional collapse and government bailouts that defined the 2008 financial crisis. Volcker went on to observe that such crises have in fact been a “recurrent feature of free and open capital markets” and that “any return to heavily regulated, bank-dominated, nationally insulated markets is pure nostalgia.”

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Luzi Hail, Ahmed Tahoun, Clare WangInstitute for New Economic Thinking

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The 1% Is Overrepresented in the Ivy League


If your parents count themselves among the top 1%, you’re 77 times more likely to attend an Ivy League college than your peers from families in the bottom 20% of the U.S.’ income distribution.

Why the focus on Ivy League universities? Of course, the pool of top institutions of higher education extends far beyond that group. But in mobility terms, say the authors, you’re more likely to move from the bottom quintile into the top 1% if you attend elite colleges, including those that comprise the Ivy League. In other words, elite colleges can confer mobility in powerful ways.

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Jack Gao — Institute for New Economic Thinking

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Trumping Capitalism?


The Dow Jones Index has soared in the last few days as Trump takes over his role as the President of the United States. Here is an interesting needull on what Trump would imply for capitalism.

All of this leads, finally, to the question of how Trump’s presidency is likely to shape global economic thinking and the future of capitalism. Phelps offers a grim prognosis. “American innovation first began declining or narrowing as far back as the late 1960s,” he notes, owing to “a corporatist ideology that permeated all levels of government.” True, “Silicon Valley created new industries and improved the pace of innovation for a short time”; but now “it, too, has run up against diminishing returns.”

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Anatole Kaletsky — Institute for New Economic Thinking

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