Really great links - Greece and Argentina - Great depression - Great moderation - Contingent debt - Healthare and socialism

Baseline Scenario - Greece and Argentina - "There are disconcerting parallels between Argentina’s catastrophic decade, 1991-2001, which ended in massive default, and Greece’s recent and impending difficulties. The main difference being that Greece is far more indebted, is much less competitive in global markets, and needs a commensurately greater fiscal and wage adjustment. "

Liaquat Ahamed - Great depression - "At one point in their book, the authors draw a comparison between the position of Britain in the early twentieth century and the current position of the United States. I was surprised that they did not make more of the parallels. Through much of the nineteenth century Britain was the linchpin of the world financial system. It was the capital supplier of last resort during crises and acted countercyclically as the economic locomotive for the world. But, almost bankrupted by the First World War, it was no longer able to fulfill that function after 1919. The mantle of leadership should have passed to the United States. But American leaders were too parochial and insular to seize the opportunity. Thus, during the 1920s and 1930s, the United States was unwilling to lead and Britain unable.
American economic historian Charles Kindleberger used to argue that ultimately the Great Depression happened because of this failure of economic leadership on the world stage. He believed that a well-functioning global economy required one country to act as the leader, in effect to do more than its fair share of keeping the global economy moving, fully recognizing that smaller countries will freeload off of its efforts. If we are at a similar transition point in world leadership, if the United States has indeed been knocked off its pedestal in much the same way as was Britain in the early twentieth century, it does not bode well for the ability of the global economy to navigate its next storm."

Jordi Gali & Luca Gambetti - Great moderation - "In that regard, and as discussed in more detail below, our evidence is consistent with a decline in the size of nontechnology shocks as well as more effective countercyclical policies in response to those shocks. The hypothesis of a change in policy is reinforced when the variations in the responses to technology and nontechnology shocks are considered jointly. Some key features of those changes can, in principle, be explained by the adoption, since the early 1980s, of a monetary policy that focuses on the stabilization of inflation, for that policy would also tend to stabilize output in response to a variety of demand shocks while accommodating the changes in potential output resulting from technology shocks. Furthermore, the gradual change in the response of labor productivity to nontechnology shocks (with an eventual change in the sign of that response) is consistent with a declining importance of labor hoarding by firms, possibly as a consequence of better labor input
management practices or more flexible labor markets (that make it less costly to hire
and fire workers in response to changes in demand)."

Richard Squire - H/T Alex Tabarrok - Contingent debt - "This Article identifies a pervasive opportunism hazard created by contingent debt that lawmakers and scholars have overlooked. If liability on a firm’s contingent debt is especially likely to be triggered when the firm is insolvent, the contract that creates the debt transfers wealth from the firm’s creditors to its shareholders. A firm therefore has incentive to engage in correlation-seeking — that is, to incur contingent debts that correlate, or that through asset purchases can be made to correlate, with the firm’s insolvency risk. The consequence is an overuse of contingent debt that destroys social wealth through overinvestment, higher borrowing costs, financial distress, and potential systemic risk. Correlation-seeking is especially pernicious because, unlike other forms of shareholder opportunism such as asset substitution, it can reduce risk to shareholders even as it increases shareholder returns."

Arnold Kling - Healthcare reform - "A point that White makes is that nobody has every tried to implement market socialism in practice--not even in Poland, where Oskar Lange had a high position. I would suggest that market socialism represents an intellectual bait-and-switch, where the reality is that socialism reverts to command and control. Note that as the political process grinds on, the approach to reducing carbon has evolved away from carbon taxes and even from cap-and-trade to more command-and-control style.
I see health care policy on the same track. If you search carefully, you will find some prominent Obama people who once supported using consumer cost-sharing as a market incentive to "bend the cost curve." No more. Even "pay for performance" is fading into the policy background. Instead, increasingly, the evolution is toward price controls, which in turn will mean command-and-control allocation of medical services.
What I am saying is that whatever the theoretical merit of having government use decentralized market mechanism to implement collectivist ideals, the trend in practice is that centralized ends wind up being pursued by command-and-control means. Again, I will explore this more in a subsequent post. What I would claim is that it is not simply a matter of people trying market mechanisms, having them fail, and reverting to command-and-control. Instead, they revert to command-and-control without trying market mechanisms. I want to speculate on why that is the case."