The dollar rose today, and gold has fallen below $900 as f this writing due to revisions in the first quarter GDP release that increased growth from “anemic” to “slightly less anemic”. Note that there was considerable skepticism about the initial 0.6% GDP growth figure (the revised level is 0.9%) because the total was entirely […]
Read more...Two UK columnists looked at the credit markets, and neither liked what he saw. And they wrote it up more colorfully than most of their American counterparts would have. The first, Nils Pratley of the Guardian, tells us that that the idea that the credit crisis is on the wane is more than a tad […]
Read more...The Fed announced that Frederic Mishkin will be leaving the central bank effective August 31. The governor’s term extended through 2014, but he chose to leave early to return to the Columbia faculty, where he teaches at the business school. Personally, I think this is a good thing. Mishkin was on the FOMC and a […]
Read more...A reader pointed me to a great post at Institutional Risk Analytics, which consists of an interview with Richard Alford, an economist in the Federal Reserve Bank of New York’s foreign department during the heady years of the Plaza Accord and active FX intervention by the Group of Seven who now works as an expert […]
Read more...Steve Waldman, in a colorful post, “A run on central banks?” contends that the rapid rise of commodities prices isn’t the result of mundane factors like negative real interest rates, but a more fundamental cause: loss of faith in the monetary authorities: Just as the fear of a bank’s insolvency can precipitate a run that […]
Read more...Let me make a wee confession: I tend not to follow money supply figures closely, in part because I am not a fund manager (there are only so many things you can watch on the side) and in part because we are missing some key underpinnings that might help make it a useful metric. In […]
Read more...The warning from the ECB’s chief Jean-Claude Trichet. that the worst of the credit crunch may lie ahead, deserves to be taken far more seriously than other cautionary warnings. First, he has a reasonably good reading on what is happening with European banks (and our sources with inside connections have maintained for some time that […]
Read more...Conventional wisdom is that markets are the best place to get unbiased forecasts, but we see a sharp divergence of views between what TIPS buyers and Treasury traders in general anticipate inflation rates will be versus consumer expectations and the continued high inflows of new funds into commodities. We’ve seen this sort of divergence before. […]
Read more...Mark Thoma has posted a nice little piece by his colleague Tim Duy on what a housing bubble looks like (as in charts, not in those “what were they thinking” pictures of overpriced shoeboxes now going begging). It illustrates very nicely the most basic symptom of pricing gone awry: how housing prices hit unprecedented highs […]
Read more...There has been a raft of articles about the Federal Reserve’s new found interest in the question of asset bubbles, suggesting that the Fed might be ready to shift policy and exhibit more willingness to rein them in. Yesterday, a page one Wall Street Journal story discussed at length research central bank chairman Bernanke has […]
Read more...Willem Buiter argues that the focus on oil and food price shocks, which economists view as relative price changes rather than inflation, is muddying the discussion about inflation. He sees considerable evidence of widespread inflation and it’s central bankers’ fault. From Buiter: Inflation is rising just about everywhere. Why is this and what can be […]
Read more...Former Fed Chair Paul Volcker reiterated some of his concerns about the Fed’s recent moves and the evolution of the financial system in prepared remarks before the Joint Economic Committee of Congress. From the WSJEconomicsBlog: “Whatever claims might be made about the uniqueness of current circumstances, it seems inevitable that the nature of the Fed’s […]
Read more...Jim Hamilton must feel like a Cassandra. Last August, he warned that the GSEs were in danger of having the ambiguous status of their implied guarantee tested. That came in January, and was finessed with various new Fed facilities. Hamilton has also warned repeatedly that the Fed needs to consider institutional reform, not merely bailing […]
Read more...Steve Waldman has a typically top notch post at Interfluidity,”Let’s not write the Fed a blank check,” in which he dissects the implications of the Fed’s request to Congress to pay interest on bank reserves. Waldman explains the technical workings and the pros, and gets to the real issue. This represents a change from a […]
Read more...In Project Syndicate (hat tip Mark Thoma), Joseph Stiglitz takes on an increasingly common approach among central banks, namely, to announce a formal target for inflation and use interest rate policy to attempt to achieve it. Note the US does not use this approach, although one of the Fed’s responsibilities is to maintain price stability. […]
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