Sometimes guest blogger Lune sent us a piece on a post by Willem Buiter, “Stigma, Schmigma,” that I had included in Links last night. I had been tempted to comment on it, but events intervened, and Lune independently took up the mission. From Lune: Willem Buiter does a great takedown of the Fed’s policy of […]
Read more...You simply cannot make this up. I found a section of this priceless commentary from the Reserve Bank of Zimbabwe via Marc Faber’s latest newsletter (hat tip reader Dean), and had to verify it. The original provides an even richer mine of material. From the Reserve Bank of Zimbabwe (boldface theirs): As Monetary Authorities, we […]
Read more...Let’s see, Bloomberg said yesterday that the Federal government had committed $7.4 trillion to lending facilities and guarantees. The total is now $8.2 trillion thanks to new programs announced today to aid borrowing by consumers, small businesses, and homeowners. Stocks have rallied, and the 30 year bond is also up three points, due to a […]
Read more...Remember how, post 9/11, President Bush urged patriotic Americans to go to the mall? It appears the officialdom is fond of time-tested remedies. Bloomberg tells us that the Fed and Treasury have a plan,, using TARP funds, to get consumers to spend again by supporting consumer lending. There are a few problems with this approach: […]
Read more...One topic we’ve mentioned from time to time is the near disappearance of the debtor in possession financing market and why that is a more serious matter than its dry name might suggest. When large companies seek to use Chapter 11, typically they are broke (duh) as in out of cash. Chapter 11 takes time, […]
Read more...As correspondents and readers have pointed out, Fed chairman Ben Bernanke and the rest of DC is increasingly resorting to the playbook he suggested in various papers on Japan’s deflation. The Federal government has said that it is willing to lend or backstop up to $7.4 trillion to get the credit markets moving again. This […]
Read more...A nice article in the Financial Times by Wolfgang Munchau, “Double jeopardy for financial policymakers,” discusses the Federal Reserve’s move to quantitative easing. There has been some mention of this in the media, as a Bloomberg story from last week indicates, but it hasn’t gotten the attention it deserves. The use of quantitative easing is […]
Read more...Ah, the US keeps inching its way into the behaviors of post-bubble Japan. The latest pending regulatory move it to reduce failures to deliver securities in the Treasury repo market, a vital source of short-term financing for banks and broker dealers. But the remedy under consideration would lead to negative rates on some repos. a […]
Read more...Oddly, I saw this comparatively late (about an hour), and no notice Bloomberg, which is perfectly willing to pick up news reports by competitors with attribution, and Asian markets ex Japan (closed today) were still in negative territory, although slightly less so. Note key element of the deal is that the Federal government will guarantee […]
Read more...Bloomberg tells us that JP Morgan has issued a report that contends that the Federal Reserve will cut its policy rate to zero by early next year. While this may prove to be correct, it certainly isn’t an obvious move. First, most central banks regard getting below 1% short term rates is dangerous territory. ZIRP […]
Read more...Readers may know we have been concerned about the dramatic fall in shipments of basic materials, as reflected in the collapse of the Baltic Dry Index. This in turn, as we have also stressed, is in large measure to the difficulty of obtaining trade finance, in particular letters of credit. A very good post at […]
Read more...One of the underlying assumptions of the Fed’s and many other central banks’ response to the credit crisis is that it can be halted, and hopefully remedied, by having the government backstop the troubled financial sector. One template is not to repeat the supposed mistakes of the Great Depression and Japan’s post bubble era, where […]
Read more...Note that the headline above was on a Wall Street Journal story about the new taxpayer-raping improved version of the AIG bailout. The current headline is anodyne: “New AIG Rescue Is Bank Blessing.” Just as one wonders why the government backed down on a deal that was appropriately punitive to AIG (at worst, it was […]
Read more...James Carville said that when he died, he wanted to come back as the bond market, that way he could intimidate everybody. If asked today, i suspect he’d ask to come back as a bank. They get all the bennies. Seriously, Amex becoming a bank? This is patently ludicrous. Amex poses no systemic risk, so […]
Read more...As this Bloomberg article discusses in detail, the Fed has violated promises it made to Congress, both regarding the amount it would lend (the amounts are vastly in excess of anything envisaged) and its commitments about transparency (which have gone completely by the wayside). Bloomberg has petitioned to get certain details disclosed via a Freedom […]
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