Shadow Banking

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


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.

Dear Reader,

This feels like the most important fundraising drive since I've been CEO of Mother Jones, with staggeringly high stakes and so much uncertainty. In "News Is Just Like Waste Management," I try to unpack the reality we all face and how we can rise to the challenge. If you're able to, this is a critical moment to support Mother Jones’ nonprofit journalism: We need to raise $400,000 to help cover the vital reporting projects we have planned, and right now is no time to pull back.

Monika Bauerlein, CEO, Mother Jones

Dear Reader,

This feels like the most important fundraising drive since I've been CEO of Mother Jones, with staggeringly high stakes and so much uncertainty. In "News Is Just Like Waste Management," I try to unpack the reality we all face and how we can rise to the challenge. If you're able to, this is a critical moment to support Mother Jones’ nonprofit journalism: We need to raise $400,000 to help cover the vital reporting projects we have planned, and right now is no time to pull back.

Monika Bauerlein, CEO, Mother Jones

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate