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Matt O'Brien
Columnist for the Washington Post. Formerly the Atlantic & TNR.
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Matt O'Brien Sep 21
Our HUD Secretary seems to think that Dan Brown writes nonfiction
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Matt O'Brien Sep 21
Turkey's currency crisis is threatening to turn into a banking crisis, so, of course, its government is getting ready to ... cut spending?
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Matt O'Brien Sep 21
It turns out that it isn’t easy to convince people that your tax cuts for the rich & corporations aren’t for the rich & corporations
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Matt O'Brien Sep 21
*Checks in on Brexit* Yep, looks like this trade deal is going to be "the easiest in human history"
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Matt O'Brien Sep 20
Very interesting discussion. The early 2016 slowdown really doesn’t get enough attention as one of the reasons Trump won.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
The bottom line is that the broad contours of the last 10 years might have looked pretty similar if Lehman had been saved, just smaller. But that’s everything.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
China, meanwhile, would have had a much smaller stimulus—it was 19 percent of GDP in actuality—and a much larger trade surplus as a result. At a time when the U.S. & Europe would have been languishing with near-zero interest rates, this might've become a political flashpoint.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
The result might have been a sharper but shorter euro crisis, with everything that happened from 2010-15 being compressed into a much smaller window.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
Kicking out Greece might have given Merkel the political cover she needed to do more. And faced with the prospect of 60 years of integration unraveling over the course of 60 hours, the ECB would have bought bonds big time. The Fed would have had to open swap lines too.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
What Lehman taught us, though, was that we couldn’t have any more Lehmans. So without it, there might have been a little less willingness to bail Greece out. Which means there might have been an even European crisis in 2010 or 2011.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
Europe still would have had its own crisis. It had had unsustainable flows into Greece, Spain, Ireland and the rest, and eventually those were going to stop. That’s what unsustainable things do. Lehman merely brought that forward a little.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
This might have gone on until unemployment was 7 or 8 percent — and the recovery still would have been slow since households had so much debt. There still would have been a stimulus, but not quite as big. Still a pared down version of Dodd-Frank as well.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
The simple story is the housing bubble had been supporting a lot of demand, so without it things would have been tough. Originally, unemployment had been going up because housing prices were going down, but then housing prices would have gone down because unemployment was up.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
The problems in the financial system were amplifying the problems in the real economy, but those problems in the real economy still would have been there without a panic.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
There still would have been a pretty nasty recession in the U.S. The easiest way to think about that is that we had two problems back then: the housing crash, and the losses the housing crash was causing the banks.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
This had worked in the early 1980s when losses from the Latin American debt crisis had left a few big banks technically insolvent. The best case, then, is that we had a few years of zombie banks trying to fix their old problems. Undead is better than almost dead, though.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
A few big lenders directly exposed to the housing market — think Wachovia — likely still would have gone under. But avoiding an all-out panic *might* have let us avoid a TARP-style bailout. The hope is that banks might have been able to earn their way out of their problems.
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Matt O'Brien Sep 20
Replying to @ObsoleteDogma
Even if the Fed had been able to grease the wheels for a Lehman deal like it had with Bear, AIG still probably would have needed to be bailed out, and the other investment banks likely would have needed to sell themselves.
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Matt O'Brien Sep 20
Our world changed 10 years ago when Lehman failed. But what would things have looked like if Lehman hadn't gone under? I talked to Tim Geithner, Frederic Mishkin, Barney Frank, and many others about that.
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Matt O'Brien Sep 19
Shadow banking lives on: private equity firms aren't doing as many buyouts and are doing more lending
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