Economy: Power Struggle Behind the Foreclosure Crisis
• "Though the public uproar over botched home foreclosures has focused on sloppy and often fraudulent paperwork, a much bigger battle is underway behind the scenes over how much more the banks should be helping troubled homeowners," CongressDaily (subscription) reports. "Consumer groups and state attorneys general around the country are seizing on the foreclosure mess as a way to pressure the nation's banks into making bigger and faster concessions on mortgages for millions of delinquent borrowers who want to stay in their homes."
• "Two top U.S. Federal Reserve officials gave competing views on the need for more monetary stimulus to the U.S. economy, continuing a public debate over further easing even as the core view at the U.S. central bank appears to favor such a move," Reuters reports.
How much of a factor in the downturn have been sticky wages and prices? Can you point to sticky wages affecting the level of employment in particular industries, or sticky prices further dampening demand for some goods and services? Is there anything that government could do to effectively unstick wages or prices? Does the incidence of stickiness indicate that unionization (which is at historically low levels) isn't as much of a factor in sticky wages as once thought?
-- John Maggs, NationalJournal.com
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Responded on March 10, 2009 2:57 PM
Litan makes a point: this topic will provide future employment to economists.
Otherwise, to say that sticky wages (or prices) play a role in unemployment is a bit like blaming gravity for the collapse of a bridge. It's not of any use to the civil engineers.
Responded on March 2, 2009 10:11 AM
My impression from anecdotal reports -- in the media and in personal conversations -- is that employers are more willing to offer wage cuts in lieu of layoffs, and employees more willing to accept them, in this downturn than in any previous recession of my lifetime. To the extent this occurs, this will mitigate an otherwise horrific decline in employment. In future years, I suspect there will be a number of economists who will be sifting through the data to whether and to what extent wage cutting in fact has happened.