Category Archives: Federal Reserve

Will the Fed Ever Taper?

Overnight market action shows that nobody really has a clue about the Fed taper any longer.

Satyajit Das: The Suzerainty of Central Bankers

By Satyajit Das, a former banker and author of Extreme Money and Traders Guns & Money

Benn Steil (2013) The Battle Of Bretton Woods: John Maynard Keynes, Harry Dexter White, And The Making of The New World Order; Princeton University Press

Neil Irwin (2012) The Alchemists: Inside The Secret World Of Central Bankers; Headline Publishing Group

Economist Brad DeLong observed in 2008: “It is either our curse or our blessing that we live in the Republic of the Central Banker”.

Why You Should Not Be Enthusiastic About Janet Yellen as Fed Chairman

While it’s a relief to have Larry Summers out of the running for the Fed chairmanship, it’s also important not to labor under any delusions about Janet Yellen, the nominee presumptive.

All Eyes on the Fed Taper

By Leith van Onselen, Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. You can follow him on Twitter at @leithvo. Cross posted from MacroBusiness

It’s all about the FOMC meeting at 04:00 AEST tomorrow morning and to be honest nothing else really matters. Ben Bernanke speaks 30 minutes later at 04:30 AEST and the chairman’s speech will also be highly watched, potentially increasing volatility across the board.

Bill Black: Higher Bank Capital Requirements are Necessary but not Sufficient to Prevent the Next Crisis

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posed from Benzinga

The last ditch efforts to save Larry Summers’ prospective nomination to run the Fed and the comments about his withdrawing from consideration have prompted further discussions of financial regulation. The thrust of the comments is that Summers’ big regulatory idea was that capital requirements are the key and other forms of rules are worthless because they are easy to evade.

The last ditch efforts to save Larry Summers’ prospective nomination to run the Fed and the comments about his withdrawing from consideration have prompted further discussions of financial regulation. The thrust of the comments is that Summers’ big regulatory idea was that capital requirements are the key and other forms of rules are worthless because they are easy to evade.

It’s not only not a good idea, it’s not good because capital requirements can be gamed just like other rules.

Ding Dong, the Witch is Dead, Summers Withdraws Name from Fed Chair Race (Updated)

I was just working on a post saying that Larry Summers campaign to become Fed chairman was in serious trouble, and here he’s gone and done us all the favor of getting the message.

Lynn Parramore: Seven Reasons to Fight Obama on Picking Out-of-Touch Crony Capitalist Larry Summers as Fed Chair

The Fed chairman is the most powerful official Obama will pick— directly affecting each and every wallet in America. As much as anything, this appointment will shape our country’s future.

Obama appears to want Summers, and so do the most powerful people on Wall Street. But he is not the people’s choic

Jayati Ghosh: None of the Experts Saw India’s Debt Bubble Coming. Sound Familiar?

So now India is the latest casualty among emerging economies. Over the past 10 days, the rupee has slid to its lowest-ever rate, and the Indian economy may well be on the verge of a full-blown currency crisis. In this febrile situation, it is open season for rumours and pessimistic predictions, which then become self-fulfilling.

This means that even if there is a slight market rally, investors quickly work themselves into even more gloom. Each hurriedly announced policy measure (raising duties on gold imports, some controls on capital outflows, liberalising rules for capital inflows and so on) has had the opposite of the desired effect. Everything the government does seems to be too little, too late – or even counterproductive.

Fed’s Jackson Hole Participants to QE-Exit Whacked Emerging Economies: Drop Dead

The latest Fed confab at Jackson Hole is demonstrating that central bankers were so keen to avoid taking much blame for the global financial crisis that they also failed to learn critical lessons from it. That lapse in turn is directly related to the present emerging markets upheaval that has the potential to morph into something worse.

A Very Profitable Part Of Banking Goes Totally To Heck

Refinancing mortgages is a phenomenally profitable and nearly risk-free business for banks, and one of the few growth sectors that were actually spawned by the Fed’s herculean efforts to force down long-term interest rates through waves of quantitative easing. Banks went on a hiring binge to shuffle all this paper around and extract fees along the way before they’d dump most of these mortgages into the lap of government-owned and bailed-out Fannie Mae and Freddie Mac. And then they’d run.

What Paul Krugman Should Have Learned from James Tobin but Didn’t

Paul Krugman last week wrote yet another response on the issue of “how banks work”. The problem is that Krugman’s critical source for his argument, James Tobin, in fact has taken the position the opposite of Krugman’s on monetary operations, as do central bankers.

Bill Black: The Banksters Master Irony – Push Summers & Geithner for Fed Due to Their Regulatory Zeal

The big banks are desperate to prevent Janet Yellen from being appointed as Bernanke’s successor to run the Fed. Their sexist attacks have backfired.

Mr. Market is Having Another Fit Over the Fed’s Taper

Asian markets got off to an only mildly down start, so I busied myself on a post that took some concentration, along with some nagging tech matters. As I’m about to turn in, it appears that Asian markets decayed during the trading day and Europe is off to a wobbly start.

Wolf Richter: Cisco CEO Reports Record Sales And “Lumpy” Demand, Just Like In November 2007, A Month Before Stocks Began To Crash

As Wolf Richter argues, Cisco has been a harbinger of market turns, and he describes an earnings call which struck him as eerily similar to another inflection point, that of fall 2007.

Why is Obama So Keen to Appoint Larry Summers to the Fed?

Felix Salmon pointed out today that Larry Summers is now being touted as the odds-on favorite (65%, to be precise) to be Obama’s nominee as the next Fed chief. Felix stresses that Obama’s reason for favoring Summers is based on the sole criterion on which Summers could conceivably be depicted as preferable to the other widely-touted contender, Janet Yellen: he is believed to be better than Yellen would be in handling a crisis.

Felix kneecaps this argument: