I'm economics editor for The Wall Street Journal and also write the Capital column, a weekly look at the economy and forces shaping living standards around the world. I appear often on National Public Radio and WETA's Washington Week in addition to posting daily at WSJ.com/seibwesselhttp://WSJ.com/seibwessel. I am also the author of two best-sellers: In Fed We Trust: Ben Bernanke's War on the Great Panic (2009) and Red Ink: Inside the High Stakes Politics of the Federal Budget (2013). https://twitter.com/davidmwessel/status/377145223735828480 I am looking forward to taking your questions about the fifth anniversary of the global financial crisis (about which I wrote for the front page of today's WSJ), the economy, Washington or anything in between. redd.it/1m1u10 AMA.

Reddit friends: I'm calling this AMA to an end. Thanks for the good questions. It's been fun, and I hope to do it again some time. You can keep track of what my colleague Jerry Seib and I are up to at wsj.com/seibwessel or follow me on Twitter (davidmwessel)

Comments: 113 • Responses: 46  • Date: 

bellekid9 karma

What do you think about the issues of student debt and the current job market? I graduated college in May and am over $100k in debt due to student loans, yet I can't repay them, which I'm supposed to start doing soon due to my inability to get a job despite applying many places where I am fully qualified. In talking to quite a few of my college classmates, they're in the same predicament.

What do you think about this and how do you think student loan debt will be handled going forward? I know I'm not the only one in this situation.

davidmwessel7 karma

You've put your finger on a HUGE problem. You should, by the way, consult the Consumer Financial Protection Bureau if you need advice about your options (if there are any) http://www.consumerfinance.gov/students/

Going forward, we've seen the president make some proposals here to (a) make more broadly available a federal program that ties loan repayment to your income and (b) help students and parents become better consumers of higher education. College remains a very good investment, one worth borrowing for, but not all higher ed is worth the price and some loans are better than others.

ShadowHawkX1 karma

I've seen the latest reforms from Washington help future students. There's not much for those who currently have huge student loans, especially from online schools. Has there been, or do you believe there will be, any push to help those who are currently drowning in school debt? Will any of these changes help those who are in debt to online schools?

davidmwessel3 karma

I don't think so, but I don't really know. Do talk to your lenders and knock on the CFPB door.

davidmwessel5 karma

By the way, there are all great questions. I'm getting a real work out here!

TreyeX1535 karma


Appreciate you doing this reddit session. I literally just finished your book “In Fed We Trust” a couple hours ago and was shocked to see your name on the IAMA schedule after having not checked for a few weeks. Coincidence? I sincerely enjoyed reading the book for all the insight you provided on such a tumultuous time in American history, and I was hoping you could answer a few questions.

1) Now that you are four years removed from writing “In Fed We Trust,” is there anything else you wish you would have included? Rather it be for informative or clarification purposes.

2) Outside of WSJ, what are your go-to resources for credible and unbiased news?

3) What are the top 5 books you would recommend? (Written by you or not…doesn’t matter)

4) Do you have plans to watch the Bloomberg Hank Paulson documentary?

BONUS question you don’t have to answer: Any tips for becoming a better writer? I have no aspirations to pursue a profession in writing, but I’m curious for the sake of my own self-development

davidmwessel3 karma

1) I'm actually pretty pleased with the general outlines of the story In Fed We Trust. There is a LOT of detail that I wish I'd known at the time from all the emails and records that have come out about Lehman, Bank of America. But I think they would have added to the story, not changed it. 2) I get four newspapers a day (NYT, WashPost, FT, WSJ) and read the Economist, and look at a dozen blogs. more later.

davidmwessel3 karma

Books I enjoyed about the crisis include Too Big To Fail by Sorkin at the NYT (as well as the HBO version) and Michael Lewis' book on the shorts . Alan Blinder's "After the Music Stopped" is very comprehensive and readable. It's always interesting to read the principals' accounts -- so far Hank Paulson and Sheila Bair. And, yes, I do intend to watch the documentary that Bloomberg Businessweek has made about Hank Paulson.

johnsonp183 karma

In your opinion, is our current economic outlook "getting better" or "getting worse before it gets better"? I put those in quotations because I know there is much more to this question that how it sounds. I'm just curious if we are in a state of rise or decline and what the near future may hold.

davidmwessel4 karma

It looks to me like the economy is getting better, but at a painfully slow pace. Unemployment is coming down. The economy has been growing for four years. But the Congressional Budget Office says we'll won't return to full employment...in 2017.

comediekid2 karma

I think you're ignoring the fact that the only reason "unemployment" is going down is because the government only counts the unemployed as those "ready, willing, and able to work." A person who has been discouraged from looking for work because he's been unemployed for 4+ years is not in that statistic. The real unemployment rate, including those who are no longer eligible for unemployment benefits and those who took part time jobs (underemployed) is well over 16%.

ETFanalyst1 karma


comediekid-4 karma

No, because the "real unemployment" rate already includes everyone who is unemployed. All you have to be is of working age (18-67) and not currently in school.

davidmwessel5 karma

The headline unemployment rate counts all those who say they're looking for work. It's an imperfect measure, but not an irrelevant one. It's better to have 7.3% than 10% unemployment. It is true that the fraction of adults who are in the labor force (working or looking for work) and that means that the falling unemployment rate overstates the health of the labor market. Bottom line: Things are better. They are not, however, good.

watrous183 karma

What do you believe are the implications for short to mid term economic growth (1-4 years) when our economy is only adding part time jobs for the most part (and in the retail and food services industry predominantly). Do you blame the ACA/ ObamaCare for this? Do you see this trend continuing? Thanks!

davidmwessel3 karma

This is a very good question. As your question implies, there's a big debate over whether Obamacare is responsible for the fact that we're creating so many part time jobs. I haven't read up enough to be able to assign blame. I do think it's a big problem, though, especially since so many part-time jobs don't come with benefits or pay pretty lousy wages.

getoffmylvl3 karma

What advice can you give to a junior in college majoring in economics?

davidmwessel8 karma

1) Read The Wall Street Journal every day (and I'm not kidding.) 2) The insights of economics are not found exclusively in the math even though some economists have forgotten that. Read some economic history, maybe even some primary sources or biographies of great economists. 3) Ask your professors how economics can make life better for people.

Duck_Avenger3 karma

What is your favorite economist joke?

davidmwessel22 karma

Economists don't make for very good jokes. I do like the one about the three econometricians who went deer hunting. The first shot, and missed to about 10 feet to the left. The second shot, and missed about 10 feet to the right. And the third one said: "We got him!"

justsomeyank3 karma

Any pearls of wisdom to high school seniors?

(I accept you won't consider yourself expert but your opinion is very welcome)

davidmwessel6 karma

Read a lot, and learn some math and statistics, and study another language.

justsomeyank1 karma

100% of people abuse statistics. ;-)

davidmwessel12 karma

You need to know enough statistics to know when they're being misused.

justsomeyank3 karma

How would the US economy change if high-speed trading were banned?

(perhaps I am too ignorant to phrase my question well but I hope you see my meaning and answer accordingly)

davidmwessel4 karma

I'm not an expert in high-speed trading so I really don't have a well-grounded opinion. From what I've read, though, it doesn't look to me like it is doing much good for the economy as a whole.

yesihavereadthat3 karma

What section of economics is growing the fastest?

davidmwessel6 karma

The one that tries to figure out how the heck we fell into such a deep abyss in 2008 and how we can avoid a repeat.

PattVE3 karma

David - I did not take any econ classes in college and now am wanting to educate myself. Do you have any book recommendations for learning more about:

1) Financial Management (personal) (more advanced than the very practical, basic advice) 2) Investing in your 20s, or at a younger age (given this economic climate) 3) Understanding Micro/Macro Econ

I know there are many good books, but if you could mention those that stand out to you in particular, that would be helpful. Thanks!

davidmwessel2 karma

My friend (and former WSJ colleague) Greg Ip has a good book "Little Book of Economics: How the Economy Works in the Real World" http://www.amazon.com/Little-Book-Economics-Economy-Profits/dp/1118391578/ref=sr_1_1?s=books&ie=UTF8&qid=1378758855&sr=1-1 I don't really have a great guide to personal finance to suggest. I have found that some of the mutual fund company websites (Vanguard, Fidelity, T Rowe Price) have some good primers.

PattVE2 karma

Thank you very much. I enjoy hearing you as a regular commentator on NPR. That is how I first heard about you and do intend to check out some of your literature, as well!

davidmwessel3 karma

dottiebowman tweets: When will the onioin-skin on QEII be peeled back and how bad will inflation really get when it happens? WESSEL answers: Well, there's a chance the Fed will begin scaling back its bond-buying, gradually, at the September 17-18 meeting; if not, then the best guess is that they'll do it later this year. Inflation? You know, there really isn't any sign of it out there despite all the money the Fed has printed.

ETFanalyst2 karma

Thanks for doing this David, very cool! My question: Do you think we live in a zero-sum society?

davidmwessel4 karma

I hope not! I do believe it's possible for us to have a growing economy over time in which there's more for almost everyone (though of course more for some than for others.) If you compare living standards 2013 to 1963, you can see that's possible. But I worry a lot about the recent (and pre-recession) trend towards a wider gap between winners and losers in the economy.

clafoutis112 karma

When the stock market sells off, where does all that money go?

davidmwessel4 karma

Well for every seller there's a buyer, of course. But look at it this way, if you buy a house for $250,000 and it goes up to, say, $350,000 and then falls to $275,000, where did that money go? In one sense, you lost $75,000, right (difference between 350k and 275k.) In another, it wasn't really worth $350,000.

watrous182 karma

What do you believe are the implications of a strike on Syria with intercepted Iranian communications threatening retaliation in Iraq and throughout the region?

What happens if more country's stop using the petrodollar like Iraq in 2000, Libya (shortly before Gaddafi's ouster) and Iran have done?

davidmwessel2 karma

I'm not terribly worried about oil-producers abandoning the dollar right now. There aren't a lot of good alternatives, and remember that Saudi Arabia is an US ally in this latest round. Someday oil producers may price oil in a basket of currencies, but not soon. The implications of an attack on Syria depend a lot on what follows. Some sort of Syria/Iran retaliation, particularly one that disrupt oil production or shipping would have a big effect on oil prices, with obvious consequences. It's interesting that US financial markets, so far, don't seem alarmed. Of course, that could change quickly.

Cestra2 karma

Do you believe that we will be able to learn from this crisis and see a cultural shift a way from highly leveraged consumption or is regulation really the only prevention?

davidmwessel3 karma

I do. The Depression changed people's behavior. I suspect that at least for a while Americans will be a lot more careful about the size of their mortgages and about expecting the value of their homes to go up a lot. Whether they'll save more and more prudently, I don't know. I wonder sometimes if Wall Street already has forgotten how bad things were five years ago, and how much they relied on the government and taxpayers to bail them out.

Thousand1k2 karma

Thanks for coming to reddit!

In your opinion when do you think the US dollar will crash irreparably? The deficit is already beyond repair and it's only a matter of time until something bad happens.

davidmwessel6 karma

People have been predicting the dollar crash for some time now, and it hasn't arrived. One reason: There's no serious rival for the dollar. Euro? Europe can't even decide to have a currency. Japan? Until recently it was stuck in the mud, and even now it's pursuing a policy that will reduce the yen's value? China? Sometime, but not for a long time, not until it has more transparency and respect for property rights. The dollar could still have a long run yet.

courtkid10122 karma

How do you feel about America's future economically? Are we destined to crash again due to misleading figures from unemployment and record stock levels?

davidmwessel6 karma

I worry a lot about the next few years. We have a lot of lingering misery from the financial crisis and Great Recession, and we're not doing enough to relieve it. We are settling for too little growth, and gridlock in Washington is getting in the way of any strategy (whether conservative or liberal) to change that. I find myself optimistic about the future, but it's more faith (in my kids' generation and in American resilience) than reason.

davidmwessel2 karma

Are there any questions I missed? If so, let me know. David

Blacktiles2 karma

Perhaps Larry Summers, Robert Rubin, Henry Paulson, and Richard Fuld don't deserve jail time, but certainly some legal precedent must be set when financial institutions like HSBC are caught laundering money for drug cartels, mafia organizations, and terrorist groups. Apart from the moral and ethical reasons for pursuing a more severe charge against the implicated, isn't it in the government's best economic interests to offer more than a slap on the wrist for corps aiding enemies that are already a major suck on our monetary resources?

davidmwessel3 karma

Banks and other financial institutions and the people who run them should be held accountable for their sins and their errors in judgment. They certainly shouldn't get bonuses if their companies fail or get bailed out. I'm as frustrated as anyone that so few people have been prosecuted or punished. I blame law-enforcement and financial regulators for some of this, but also think there were some real legal obstacles that were hard to surmount (like relying on 'failure to disclose' as the charge, and discovering that the companies' lawyers had disclosed everything short of an asteroid hitting the earth as a risk)

dalvey2 karma

what event in the crisis surprised you the most?

davidmwessel3 karma

Good question. Every day was a surprise in the fall of 2008. I didn't see the reaction to Lehman's bankruptcy coming, and I surely didn't expect a run on money market funds. But at the time, things were happening so fast, it was a struggle just to figure out what was going on. I do remember being stunned in March 2008 when the Federal Reserve invoked powers that I knew about (to lend to almost anyone) but hadn't used in my life time.

clafoutis112 karma

Why don't WSJ and other business publications do a better job of explaining complex financial jargon in plain English to readers? It seems like most stories are written for an audience that's already very finance-savvy. How can business journalists communicate their ideas in a way that appeals to a broader audience?

davidmwessel5 karma

Gosh. We try. I certainly am committed to that, and think about it every time I start typing. The trick is to know enough jargon to speak to the high priests and enough substance to translate it into ordinary English. When you see something that you think the WSJ has made incomprehensible, send it to me.

vernmckinley1 karma

In your article today you said Paulson, Geithner say Bear Stearns rescue was necessary “because the firm was so interconnected with the rest of the system.” What documented evidence have you seen for this interconnectedness? I have sued the Board of Governors under FOIA to secure precise details and they provided no specifics (only redacted documents = http://www.scribd.com/doc/20567367/Board-of-Governors-Response-30-Sept-2009). Should we take the Fed’s word for it?

davidmwessel3 karma

If you read the Financial Crisis Inquiry Commission report -- or the stories that were written as details unfolded in Lehman bankruptcy case -- I think you'll be convinced. Dick Fuld, the former Lehman CEO, however, has a rebuttal, much of which is included in the FCIC report and congressional testimony

vernmckinley0 karma

I have read the FCIC report, but it did not provide any such details. So you cannot cite any particular interconnections?

davidmwessel1 karma

I misread your question. I thought you were asking about Lehman. Bear? It's a good question. I hope we'll see more specifics soon.

poops_all_berries1 karma

What are the best habits a 20-year-old can learn to benefit their financial future?

davidmwessel3 karma

1) Save, even you have to start small. 2) Don't put all your eggs in one basket. 3) Don't borrow more than you can afford to pay back. (A mortgage is ok, borrowing on credit cards to pay daily expenses is not.)

Malthous1 karma

What interested you in journalism?

davidmwessel2 karma

I worked on my college newspaper during the Watergate summer. Being a reporter looked really cool then. I went to work for a small newspaper in Middletown, CT, right out of college. I didn't think I'd stick with it. But that was in 1975 and I've never really done anything else. It's a great job, a tough industry to work it right now, but a great job.

rconger1 karma

Hi David- I enjoy your work. You live in Washington but I assume you can live in New York if you wanted. Is your choice purely professional or do you prefer DC? What do you like most about DC?

davidmwessel3 karma

I live in Washington and -- except for about 15 months in Berlin -- have been here since 1987. I find NY a little overwhelming, frankly. I like writing about public policy, which is made here. And the ratio of bosses to workers at the WSJ is much better down here in DC than in NYC

chooter1 karma

What's a recent article of yours that you would like more people to be aware of?

davidmwessel2 karma

Well, you can find everything I've written lately at wsj.com/seibwessel. I had a great time recently reporting and writing about the new restaurants on 14th Street in DC, a neighborhood burned out in the 1968 riots. http://online.wsj.com/article/SB10001424127887324165204579028942957444288.html

exeunt1 karma

Who's the most underappreciated economic thinker alive today?

davidmwessel2 karma

I was going to answer Hyman Minksy, but -- alas -- he is dead. I don't really have a good answer to this one. I am quite intrigued, though, by all the good work being done to better understand the link between financial markets and the rest of the economy. It's one thing we didn't understand well enough before the crisis.

burningdawn1 karma

What's your personal opinion about the Euro crisis?

Do you think that the EUR will survive or eventually the monetary union will eventually have to split into two areas (Northern Europe vs Mediterranean Countries)?

davidmwessel2 karma

The euro was created as much for historical and political reasons (because the generation that lived through World War II didn't ever want to see a war among European countries again.) as economic. I think the political will to hold the euro together remains strong, but it is being tested now. I wouldn't be shocked to see some country or countries leave, but I don't see that as imminent; indeed, it looked more imminent a short while ago.

sampsen1 karma

I love listening to you on NPR but every time I hear your name I can't not think about Star Trek IV and Chekov asking the cop where to find the 'nuclear wessels', so much that I always mentally insert a nuclear into your name :)

So David 'Nuclear' Wessel, can you give us your best 'nuclear wessels' as a vine maybe?

davidmwessel3 karma

Have to think about this one.

Drunken_Economist1 karma

Huge fan David!

How do you think economic journalism will adapt to a changing landscape of media consumption in which long-form is often discouraged?

davidmwessel2 karma

With difficulty. There are some signs that long-form journalism is still in demand..even on the web...despite the arrival of 140-character news stories. We'll keep looking for creative ways to tell stories, including on video. (Here's one I did on the 'fiscal cliff' a while back: http://www.youtube.com/watch?v=eiaYmhQsBHc

black_cows1 karma

David--Thanks for doing this AMA. The WSJ is practically required reading within the office and one of the only print news sources still relevant today.


  1. What do you think is the biggest developing story in the financial world today?

  2. What do you feel is the future of the current bulge bracket? Do you have any opinions about the future consolidation or decentralization of financial influence either in the US or the EU?

davidmwessel1 karma

Thanks for the kind words. As our editors wrote in the first edition of the paper: "We appreciate the confidence reposed in our work. We mean to make it better." (Or something like that.)

  1. Four big stories in the world of FINANCE today. (a) when will the Fed begin to pull back and how will markets react (b) will Japan pull this off or will its efforts blow up (c) is China going to manage an orderly slowdown or will it crash and - related to that -- (d) are emerging markets going through a rough spot or is there more to come

  2. I think in the US finance has regained some of its political clout, but one more London Whale and it'll be back in political trouble

tripomatic1 karma

So where do we stand now? Are we slowly getting out of the global financial crisis? The news in my country seems to suggest we are, but at the same time we get bombarded with rises in unemployment, small as well as big business going bankrupt in record numbers and so on.

As a European I honestly wonder if I'm still paying in euros in a couple of years, because I can only see the south of Europe becoming even worse for the time being and I can't see how north-west of Europe (where I live, in Belgium) will be able to continue to bail them out while also struggling to keep any little bit of economic growth going.

I don't know how close you follow the European situation but I try to find as many (funded) opinions about this as possible. I find the general mood in my country quite depressing because of the economic situation and we're actually still doing better than most of the other EU countries.

davidmwessel2 karma

Europe makes us in the U.S. feel better about our circumstances. Europe has yet to come to grips with the fundamental problems of economic governance and the tensions caused by the divergence between southern and northern Europe. I'm worried that the best case is that Europe will bump along and stagnate....which will mean prolonged pain in Italy Spain and Portugal...until something big changes. There's always "after the next election," but then nothing big changes. There's an absence of leadership for one thing, no one with the stature of Mitterand and Kohl.

comediekid0 karma

People are getting discouraged from looking for work. To be officially unemployed, you need to be ready, able and willing to work. To collect unemployment, you need to be recently unemployed. There are people who have been unemployed for 3-4 years already, and the economy is completely ignoring them. What do you think is a feasible solution to get us back on track and to get people back to work?

comediekid-3 karma

Guess you're not going to be answering this one because it asks for a solution... Thanks anyway!

davidmwessel3 karma

This is a huge problem, and I don't have a solution. We know that there are more than 11 million people who aren't working and say they're looking for work; of that, 3 million have been looking for a full year or more. One answer is to simply have a stronger, faster growth economy with more demand for workers. That requires different fiscal policy. But there are so many workers who have been out of work for so long that some targeted program (maybe subsidizing their wages or paying them to 'volunteer') might be wise

comediekid1 karma

The way we got out of the Great Depression was through public works projects. Highways, railroads, etc. Can't we start building the infrastructure of the future instead of going to war with Syria?

davidmwessel3 karma

There's a strong case for more public spending on infrastructure given the obvious need, the fact that the govt can borrow at low rates and the unemployment rate among construction workers. Gridlock in Washington is the only hold up. With the benefit of hindsight, it would have been better had the original stimulus bill had more infrastructure spending -- even if it had taken a few years to actually spend.

Dukefrukem0 karma

Larry Summers, Robert Rubin, Henry Paulson, Richard Fuld... why haven't these men server time in prison for fraud?

davidmwessel3 karma

Hmmm. There's a lot of anger that more of the leaders of Wall Street firms weren't prosecuted; in part that's because it turned out to really hard to identify the specific crime they committed and make the charges stick. I don't see Summers, Rubin and Paulson in that category tho. You can argue with the decisions they made, but fraud? C'mon.

Dukefrukem-1 karma

Goldman Sachs bet against CDOs it did not own and got paid when the CDOs failed. Goldman bought $22 billion from AIG bank, so much, they took out an insurance policy foreseeing the collapse of AIG.... what about this behavior is NOT fraud? And more importantly, how does this not travel up to the CEO?

Richard Fuld was given a $485 million bonus because of his work during the subprime mortgages crisis, a clear conflict of interest. Robert Rubin made $126 million at Citigroup... they were all taking advantage of the system and they knew there was a breaking point.

davidmwessel2 karma

Who was the CEO at Goldman when that deal was done?

Khedwat-2 karma

Do stock "analysts" and others in the media sometimes get bought off to promote a stock/sector? I'm sure we've all seen those articles from various websites and newsletters that recommend a stock that is in actuality doing quite bad: one such example would be in the housing market, that often receives misleading reports that end up costing the sheepish investor. Is this because the writers are being paid to promote?

davidmwessel2 karma

This is outside my wheelhouse. I don't write much about individual stocks and the market newsletters. I'm going to ask my colleagues about this.

[deleted]1 karma


davidmwessel3 karma

My colleague Jason Zweig emails me: In Mark Twain’s day, some journalists (including Twain) were on the payroll of various stock promoters, a practice that still wasn’t unheard of in the 1920s. I don’t think it happens very often anymore, even at media outlets that aren’t as respectable as The Journal. However, there are many “research” websites in which the “analysts” are paid substantial sums by the companies they cover. For example, http://www.financialdigest.info http://www.superstockprofits.com/promotional-services/ http://www.mybeststockalerts.com/ http://www.linkedin.com/pub/penny-stock-dream/59/786/1b0 http://www.pennytrader.com/disclosure/ These sites usually, although not always, disclose that they have been paid – but the disclosures are seldom prominent and most investors might never realize that what looks like independent research has, in fact, been bought and paid for.

Of course, there also are situations in which analysts who work for respectable Wall Street firms are implicitly – but no longer explicitly – indebted to the companies they cover. But those are insidious conflicts, not like what the reader is asking about.

If any of us did what he’s asking about, we would be fired and should be shot.

Throwaway4730-5 karma

Why are your propping up your post on Reddit through Twitter. Do you want fortune, fame or both?

Also, do you think the war on drugs is worth the money?

davidmwessel5 karma

If I wanted fortune, I wouldn't be a journalist. I guess that means I want fame. We're using Twitter to call attention to this AMA. What's wrong with that?

I'm no expert on the war on drugs, but I have been persuaded by what I've read lately that waging war on marijuana is probably not worth the cost -- and that our current strategies for waging war on drugs are not succeeding.