Financial Networks and Contagion,” a recent paper by Matthew Elliott, Benjamin Golub, and Matthew Jackson, uses network theory to study how financial interdependencies among governments, central banks, investment banks, and other institutions can lead to cascading defaults and failures. While the model is quite technical, the main theoretical findings are fairly intuitive. They define two key … Continue reading »
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Republican crazy talk about the debt ceiling
“I would dispel the rumor that is going around that you hear on every newscast, that if we don’t raise the debt ceiling, we will default on our debt,” says Sen.Tom Coburn, R-Okla. “We won’t. We’ll continue to pay our interest.” This is crazy talk. While the Treasury Department could prioritize interest payments after October 17 – … Continue reading »