The question of systemic risk, that is, the possibility of a generalized failure of the financial system, such as a stock market crash, is something that regulators think about a great deal and quite deliberately discuss a good bit less, since fear becomes a driving element in any market panic. The reason for the heightened […]
Read more...Bernanke normally adopts a measured tone and, as befits someone whose words can move markets, takes great care not to dwell too heavily on bad news. So it was suprising to see him issue a fairly pointed statement on risks to the banking system. His remarks on the perils of private equity loans, when taken […]
Read more...Fed Chairman Ben Bernanke has made an effort to be more transparent than his prececessor Alan Greenspan, but even Bernanke can be improved by translation. From Calculated Risk: Remarks by Fed Chairman Ben Bernanke: The Subprime Mortgage Market The recent sharp increases in subprime mortgage loan delinquencies and in the number of homes entering foreclosure […]
Read more...The Financial Times on Monday had two stories on inflation, one a lengthy story, the other a a comment, “The problem with inflation indices,” by Gideon Munchau, triggered by the fact that the Bank of England missed its inflation targets of 2% by over a percentage point (their Consumer Price Index increased at an annualized […]
Read more...That’s the bottom line of a smart and scary bit of analysis by Michael Shedlock of “Mish’s Global Trend Analysis.” And it confirms, even more dramatically than we imagined, the large and growing gap between the Fed’s reputation and its real power. The Fed is a close cousin to the Wizard of Oz. It hides […]
Read more...I happened to meet an official in the Fed’s Banking Supervision and Regulation division at a cocktail party this evening and chatted him up. He helped brief Roger Cole before met with the Senate Banking Committee last month to defend the Fed’s conduct regarding subprimes, so he is up to speed on this topic. Readers […]
Read more...Michael Shedlock has a post, “Real World vs. Financial World,” which has a lot of interesting charts, which in his view pointed to an upcoming recession. The ones that interested me in particular related to money supply. As readers may know, money supply has fallen out of favor (the Fed prefers inflation targeting these days), […]
Read more...Kudos for an excellent post, “Inflation Targeting is Flawed,” by Michael Shedlock at Mish’s Global Economic Trend Analysis. Like many other observers, we’ve criticized the Fed’s failure to consider, or even acknowledge, asset price inflation in its monetary policy decisions. Instead, the Fed and other central bankers focus on traditional price inflation, and stick their […]
Read more...Oddly, this story, which runs in today’s Financial Times, does not seem to have been reported in the Wall Street Journal or the New York Times (and perhaps not on Bloomberg either, but I am less certain since its search tools for the great unwashed aren’t foolproof). The findings, at least for the Fed, are […]
Read more...Due to Paul Volcker’s having broken the back of inflation in the early 1980s, and Alan Greenspan performing what appears to be adequately on the substance of his job and masterfully at the showmanship, the Fed’s reputation is at an all time high. And that in and of itself is a danger sign. The Fed’s […]
Read more...In an interview with the Financial Times, Larry Fink, the CEO of BlackRock, one of the world’s largest fund management groups, warns of burgeoning risk in the leveraged loan market, arguing it has the potential to go the way of subprimes, and urges the Fed to take interest. Now this story has more significance than […]
Read more...It’s one thing when people who have little to no experience in the financial markets worry about the risks posed by derivatives and other innovative financial products. It’s quite another when a concerned individual also happens to have been deeply involved in risk management at major Wall Street firms. The financial markets insider is Richard […]
Read more...One can debate whether and how much aid subprime borrowers deserve, but a pair of articles Wednesday illustrates how difficult it will be to come up with any form of relief. In an underreported story, the FDIC hosted a session that included banking and mortgage industry leaders, legislators, investment bankers, and representatives from the SEC, […]
Read more...In theory, Monday’s Supreme Court decision to bar state oversight of subsidiaries of federally chartered banks was simply a confirmation of the Office of the Comptroller of the Currency’s efforts to assert (and some would say extend) its authority, but the effect is to end the dual structure which permitted both federal and state regulation […]
Read more...If you believe in technical analysis, when a commodity or security price falls below a “support level” it will continue in the same direction until it finds a new (lower) support level. Even if you don’t subscribe to this school of thought, it is surprising and likely Not Good that the dollar is falling. One […]
Read more...