Credit default swaps, a useful but complex financial innovation of the 1990s, were traded over the counter before the financial crisis. Because of this infrastructure, a very opaque market emerged—and from it, the severe risk imbalances that helped fuel the crisis. Reforms are now being worked...

An examination of the historical and current behavior of domestic nonfinancial debt, with a discussion of B.M. Friedman's theories and an analysis of the recent unexpected surge in debt and its policy implications.

During late 1998 and much of 1999, the price earnings ratio (P/E) of the S&P 500 index reached unprecedented levels. This was especially evident for the largest 18 technology firms, whose market-weighted P/E exceeded 125 in March of last year. These valuations, which dominated the NASDAQ, proved...