Monday Links - 03/30/20
Corporate Socialism: The Government is Bailing Out Investors & Managers Not You - Nassim Taleb
I have major problems with Taleb's premise of the financial crisis bailouts – specifically that there was some quid pro quo with Geithner and "the financial industry" vis-a-vis Geithner supposedly defending the bankers. But I agree 1000% with Taleb's larger point that if the US Government is bailing out an industry, someone ought to take a haircut.
NY Fed: Fight the Pandemic, Save the Economy: Lessons from the 1918 Flu - Sergio Correia, Stephan Luck, and Emil Verner
The authors draw two main conclusions using city-level data from the 1918 Flu pandemic. First, higher mortality rates lead to lower economic growth. Second, non-pharmaceutical interventions (social distancing) lead to both lower mortality and better economic outcomes over the medium term (e.g. lower unemployment and higher growth).
On the contrary, cities that intervened earlier and more aggressively experienced a relative increase in real economic activity after the pandemic subsided. Altogether, our findings suggest that pandemics can have substantial economic costs, and NPIs can lead to both better economic outcomes and lower mortality rates.
The St. Louis Fed’s Financial Stress Index, Version 2.0
This post provides great detail on how the Fed improved on the Financial Stress Index to improve it's accuracy.
A Short History of Dead Cat Bounces - Ben Carlson