As the Wall Street Journal tells us, the Fed and the Office of the Comptroller of the Currency are issuing more “memorandums of understanding”. The MOUs not only put the bank on notice that its finances or controls aren’t up to snuff, but also call for specific remedies, such as cutting dividends, raising capital, or […]
Read more...Go Willem Buiter! The London School of Economics prof and former Bank of England and European Bank for Reconstruction and Development official has been saying for some time that the Fed suffers from “cognitive regulatory capture” and has been far too responsive to the needs of Wall Street. It’s been puzzling to watch his detailed, […]
Read more...I’m told that alcoholics and addicts have to hit bottom before they are able to renounce their self destructive ways. Ironically, their personal collapse makes them more capable of change than scientists, who, according to Thomas Kuhn in his landmark, The Structure of Scientific Revolutions, were so incapable of abandoning core beliefs that it would […]
Read more...We had written in mid July that money supply in the US, as measured by M1 and M2, had been contracting for several month s . Eurozone M1 growth had also fallen to near zero growth levels, and M4, the broadest measure of money in the UK, had actually dipped into negative growth territory. As […]
Read more...Reader Saboor was kind enough to send me an August 1 report by Stephen Roach, former chief economist of Morgan Stanley, now chairman of its Asian operations. It’s noteworthy in two respects. First, although Roach remains a long-term dollar bear, he made a well timed call that it was oversold, due for a rally, and […]
Read more...Two very good posts I suggest you read immediately: one by Michael Shedlock, “Implications of the Slowing Global Economy” which at its close makes the case for deflation, and a rebuttal from Steve Waldman, “Why Inflation“. Both are thoughtful, and as much as Waldman has the stronger argument, I suspect he will not be proven […]
Read more...Not only are we getting bailouts, we are now getting Chinese puzzle box bailouts, with new tricks nestled inside other vehicles. Maybe we should quit pretending and just give the American Bankers Association and the National Association of Realtors blank checks from the Treasury Department. We might as well be straightforward about what is happening. […]
Read more...Even though the Fannie and Freddie near crisis, which produced a few days of panic in the credit markets, now seems to have abated, money market investors are still on edge. The Financial Times warns that various risk measures remain at elevated levels: Libor, the measure of inter-bank interest rates that is a key barometer […]
Read more...Charles Wyplosz has a post up at VoxEU that is both clever and informative. He looks at the wisdom of having taxpayers shore up faltering banking systems, using the largely opposed viewpoints of two well-known economists as a point of departure: Larry Summers, former Treasury Secretary, who has argued that intervention is necessary to prevent […]
Read more...Jim Grant, who writes and publishes Grant’s Interest Rate Observer, is a rare figure on Wall Street: extraordinarily well versed in financial history, literate, possessed with a Victorian sensibility, which is very much on display here. His essay today in the Wall Street Journal is very much worth reading (and appears to be accessible without […]
Read more...I have occasionally seen Paul Volcker on the street, but never thought the circumstances were right to accost him him. Today I saw him in the neighborhood fruit and vegetable store. I went over and introduced myself, shook his hand told him I was a fan of his and that I remembered the days when […]
Read more...The Bloomberg report on Minneapolis Fed president Gary Stern’s hawkish views noted that he has a more sanguine view of the health of the financial system than other FOMC members do. From Bloomberg: The Federal Reserve shouldn’t wait until financial and housing markets stabilize to raise interest rates, central bank policy maker Gary Stern said. […]
Read more...The time has come to announce the formation of the Banana Republic Club. Membership is open, with the sole requirement being that nominees correctly discern behaviors in advanced economies that resemble those of corrupt developing countries, which for sake of convenience are referred to as banana republics. Members are eligible to receive a Carmen Miranda […]
Read more...I must admit to being hopelessly naive. The Fed opens its discount window to Freddie and Fannie, which is an admission that there is a problem but not much of a solution, since the GSEs are certain not to use it (accessing the discount window is a kiss of death, seen an admission that a […]
Read more...Ambrose Evans-Pritchard in “Monetarists warn of crunch across Atlantic economies” in the Telegraph points to a troubling development: a fall over last few months in M1 and M2 in the US, UK and EU. Many have criticized the Fed for “printing money” of late. But the evidence suggests otherwise. First, all of the cash injections […]
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