Jim Hamilton must feel like a Cassandra. At the Fed’s Jackson Hole conference last August, Hamilton gave a presentation that warned that the pricing of Fannie’s and Freddie’s debt was unwarranted given their highly leveraged balance sheets unless you believed that they really were full faith and credit obligations. He warned that assumption would be […]
Read more...We have the specter of two CEOs, each heading a firm that is a leader in its businesses and a debt powerhouse, making close to polar opposite statements about the prospects for the credit markets. Lloyd Blankfein, Goldman’s chief, said today that the credit crisis was half to two thirds through its course. While there […]
Read more...I’m late to this item, but from what I can tell, it went relatively unnoticed upon despite its seeming importance. The Wall Street Journal’s Greg Ip, in “Fed Officials Downplay TIPS Inflation Signal,” makes the case that the Fed is whistling in the dark as far as inflation is concerned. He takes their optimism at […]
Read more...Today we offer two contrasting takes on the commodities market, although they are also looking at very different issues. The post immediately prior to this one, on Martin Wolf’s worries about the impact of commodities price rises, contrasts with Ambrose Evans-Pritchard’s view that in many commodities markets, the recent price spikes are driven more by […]
Read more...Martin Wolf of the Financial Tmes focuses on the question of whether we are repeating the mistakes made in the 1970s, of entering a period of inflation due to overly accommodative monetary policy. Although he hesitates to reach a firm conclusion, he sees more evidence that commodities price rises are a function more of fundamental […]
Read more...As the economy weakens, some of the authoritative media outlets are beginning to question some government statistical releases. We noted over the weekend (“Surprise! It’s Rough Out There in the Job Market“) that a New York Times seemed caught aback by weakness in the labor market. It had, like most of the media, focused on […]
Read more...The movement in Treasury Inflation Protected Securities is a sign of investor desperation to find any shelter from inflation. And TIPS are only a partial inflation hedge. Their yield adjustment keys off the consumer price index, which due to modification to the index (to contain CPI adjusted Federal benefits) lags broader measures of inflation. From […]
Read more...I’ve been meaning to discuss how increased income disparity is bad for economic growth, because in the end you wind up with insufficient labor income to fund consumption (note that America’s high consumption rate has been achieved by lowering its already low savings rate to zero) and too much capital chasing too few investment opportunities […]
Read more...Jim Hamilton, in his latest post at Econbrowser, uses as a point of departure the oft-invoked image that Bernanke is walking a tightrope between inflation and recession. Because Hamilton is a Serious Economist, he has to be measured and fact based, which sometimes means he can’t be as pointed as I suspect he might like […]
Read more...Many observers have noted that the US is unwilling to take its medicine. In the Asian financial markets crisis of 1997, nations with large current account deficits and domestic asset bubbles saw their prosperity unravel as asset prices collapsed, leading to borrowers defaults, a contraction of credit which spiraled into a crunch, and withdrawal of […]
Read more...This post by Christian Weller at Credit Slips, takes a different viewpoint than, say, that of those in the Nouriel Roubini camp who see an apocalyptic meltdown as possible, and a mere severe recession as possible. Weller instead argues for a scenario more like that of Japan: a grinding period of low growth, falling real […]
Read more...Martin Wolf of the Financial Times turns over today’s comment to uberbear Nouriel Roubini, who looks more and more prescient with every passing day. Wolf summarizes two recent Roubini offerings, one on the twelves steps of a financial meltdown, the second on why the powers that be are unlikely to pull themselves out of it. […]
Read more...Fedwatcher Tim Duy (posting on Mark Thoma’s Economist’s View) read Bernanke’s recent Congressional testimony as saying that further rate cuts really weren’t warranted give the Fed’s medium term forecast. However, Duy has muffed some calls before by assuming that the Fed would stick by its official pronouncements rather than be swayed by the baying of […]
Read more...The repeated rounds of Fed rate cuts have led the dollar to fall against most currencies save those maintaining currency pegs. While the yuan has appreciated somewhat, it hasn’t been sufficient to have much impact on Chinese trade surplus with the US (2007 was a record year). And because China and its peers are having […]
Read more...As readers well know, we think the depth of the credit crisis means that the economy will be in low-to-negative growth territory for some time, but we did not want to deny you other points of view. And a positive reading from the credit markets is rare indeed. From Bloomberg: Before you can say “Barack […]
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