The most important book I've read this year

Larry Ball carefully looks at one aspect of the financial crisis--the collapse of Lehman Brothers--and documents that the conventional narrative, as told by many of the leading policymakers who were there, is false. According to Ball, the Fed failed to act as lender of last resort when it could have, making the financial crisis worse than necessary. In other words, at a crucial moment,  Bernanke and company did not summon the courage to act.

For serious students of macroeconomic history, a must read.

Update: Here is my Times column on the book.

A plea to economics journalists

I was recently reading an article by Greg Ip (one of best economics journalists around, by the way), and he used the following expression:

"the trade balance improved"

A quick google search finds this expression (and the related "the trade balance deteriorated") used many thousands of times by various writers. 

I would like to ask everyone to please stop saying things like this. Write instead:

"the trade balance moved toward surplus"

I know that is wordier, but saying "the trade balance improved" lends credibility to the view that trade surpluses are always good and trade deficits are always bad. That is not true, of course, and I doubt Mr. Ip intended that interpretation. But in light of all the craziness going on lately with regard to trade policy, it is best not to inadvertently give aid and comfort to the crazies.