Shadow Banking

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SHADOW BANKING….Like Ezra Klein, Dean Baker, and me (and a cast of thousands) Paul Krugman is puzzled that so many economists failed to see the housing bubble in real time. But even those who did see it mostly didn’t realize that the bursting of the bubble would lead to such an epic financial meltdown. Here’s Krugman’s explanation:

I think it’s understandable, though not entirely forgivable, that economists didn’t see the risks of a broad financial breakdown. We’re accustomed to thinking of banks as big marble buildings with “member of the FDIC” signs in the window; besides, those are the institutions on whom the standard data series report. (Indeed, some economists still fixate on those data, which is why there are still economists denying that there’s a credit crunch.) So neither the size nor the vulnerability of the “shadow” or parallel banking system were widely understood.

I don’t know if this is right or not, but it’s the first time I’ve really seen someone take a crack at addressing this question. So I thought I’d pass it along.

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And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

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