Articles

As Bill Ackman, Dan Loeb and Carl Icahn do battle over Herbalife Ltd., it is impossible to predict which hedge-fund manager has bet correctly and will “win.” I do know exactly who the losers will be: hedge-fund investors as a group. Read article> 

by Brian Barry The electoral map, the demographics behind President Barack Obama’s re-election and the high-end tax increases that were just wrung from the Republicans give Democrats reason to believe that long-term political trends are on their side in budget negotiations. This view, however, ignores what is happening at the state level. Read article> 

by Richard H. Thaler A recurring theme of this year’s presidential campaign is the need to encourage the formation of new businesses. Republicans in general, and Mitt Romney in particular, have stressed that the best way to stimulate such startups is via low tax rates on high-income earners. Read article> 

Last month, the Congressional Budget Office released a report warning that the “fiscal cliff” would cause a new recession. It came to the right conclusion for all the wrong reasons. Reasons matter. A policy response crafted to satisfy the CBO’s analysis would hurt the economy… Read article> 

by Luigi Zingales The euro crisis isn’t Angela Merkel’s fault. The real culprits are the founding fathers — Francois Mitterrand, Helmut Kohl, Jacques Delors or Romano Prodi — who created a common currency based on poor economics and worse politics. Read article> 

By Amir Sufi The failure to address crippling household-debt burdens is leading local governments to embrace the radical idea of using eminent domain to seize and write down mortgages. Over the past month, two cities in California — Stockton and San Bernardino — have made moves to file for bankruptcy… Read article> 

On June 28, the Supreme Court upheld President Barack Obama’s health-care law. Opponents and supporters are still sparring over whether its mandate is a tax. It’s time to get over this debate. The mandate’s mild penalty was never this law’s central economic and policy flaw. The legal distinctions among a mandate, a tax, a penalty, […] 

by James Heaton and Nicholas Polson Market observers often divide investors into “smart money” and “dumb money.” Our research shows there may be a way to figure out which group you are in. The first place to look is prices… Read article> 

By Takeo Hoshi and Anil K Kashyap On May 5, the Tomari nuclear plant in Hokkaido shut down for routine maintenance, leaving Japan with no operating nuclear-power plants. There is a confused debate over what to do next. Prime Minister Yoshihiko Noda has called for restarting the reactors at Ohi plant in Fukui, insisting that […] 

By Haresh Sapra U.S. and European banking regulators are conducting stress tests to determine whether financial institutions have enough capital to sustain losses as a result of adverse economic conditions. A critical question is whether these results should be made public, and if so, at what level of detail. Read article>