We’ve heard this word a lot lately — usually with a negative connotation.  Fungible is used in economics usually to refer to money, although it may also be used to refer to any item that is freely exchangeable for an identical amount of the same product.  The $10 bill that I have is exchangeable for [...]

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There is a lot of talk these days about taxes…who will pay them, will they go up, by how much, etc.  A little perspective on how taxes affect people is in order.  What’s the difference between a progressive tax and a regressive tax?
We can spend a lot of time on definitions, but it’s easier to [...]

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While out today doing our part for the economy (our slang for spending at the mall), the wife and I passed the local coal-fired power plant and got into a discussion about Cap and Trade.  It occurred to me that most of us have heard of it in the media, but may not know what [...]

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One of the crazier regulations that must be changed before the economy will come out of recession is mark-to-market (m2m). What is it?  In its simplest form, it means that financial institutions (and others) must evaluate and reprice assets daily or monthly, based on what those assets are worth right now.  It’s like saying, hey, [...]

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Do you know what an “unfunded mandate” is?  As used between government agencies, it means that one part of government requires another governmental entity (or individual taxpayers) to obey rules and regulations, but provides no funds for doing so.  Here’s an example:
The states that border the Great Lakes are required by the Federal Government to [...]

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When banks go into business, they draw up papers to propose a new bank, gather together investors that will provide the initial capital for the bank, and submit these papers to the Office of the Comptroller of the Currency (OCC) hoping to get a bank charter. That bank charter is the government’s permission to go into business as a bank, and it’s also a promise to insure deposits up to the FDIC limit.

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I thought that I might try to explain why some banks are making the case that they are “too big to fail”. There are a couple of things going on in the banking system today that we’ve seen in the past; why should bailouts be undertaken today?

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I’ve been asked to blog here on basic economics and business concepts.  The goal is to focus on current topics and give an explanation of the underlying definitions.  For example, the fact that the Federal Reserve and the US Government are going to “bail out” several industries should give us pause to consider:
1.  Why do [...]

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