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OT: I'm sorry to be OT but I think there may be an issue of interest for Austrians.

There's a NYT column by Krugman claiming that interest rate policies are not to be blamed for the crisis because both Canada and the US followed the same policy and the former banking system remained sound. The conclusion is that the regulation of the banking system is necessary for the stability of the banking system.

I was wondering whether a comparison of Canada's and the US's banking and monetary policies is available, highlighting sources of moral hazard specific to the US system which hampered the long run stability of US banks. Potential culprits: affordable housing policie, bailout expectations, FDIC insurance, I really don't know anything about Canada.

Did, moreover, Canada experience signs of an unsustainable boom in the last years (home price appreciation, equity extraction, low savings, high debt ratios...)?

Sorry again for the OT, but I do think it's an interesting issue.

Washington is an "island of not awful surrounded by a sea of awfulness"? I believe that D.C. has a higher unemployment rate than any of the jurisdictions immediately adjacent to it, such as Fairfax County where GMU is located.

The sparsely populated High Plains and Rocky Mountain states have lots of ag and commodity production, whose prices have been up recently, although they could easily fall again in the near future. This is pretty weak recalculation stuff: unemployed workers in Michigan and Ohio and California should flock to North Dakota in mass numbers?

Come on Barkley, try a little charity in your readings. I clearly meant by "Washington" the greater DC area, not the District itself.

And the point about recalculation was NOT that people should move to where unemployment rates are lower. That misunderstands the issues. The point was that the quick and dramatic rise in unemployment rates, especially in places hit by the housing bubble and the auto industry, was ITSELF the process of recalculation by which labor was being shifted away from some areas and (hopefully!) toward others.

The rising unemployment is/was part of the recalculation process.

But Steve, the issue is the rise of aggregate unemployment, which somehow this recalculation argument is supposed to explain without any resort to any naughty Keynesian drunkenness or aggregate blathering. We always have regional variations in unemployment, and while the current good performance of the High Plains and Rocky Mountain states is not so regular, Michigan has had the highest UR in the country for years, and the Washington suburbs have had lower URs than most places (including D.C. and some other parts of VA and MD) for years as well. New Orleans is a special recent case, of course.

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