With today’s weak non-farm payrolls report, financial markets participants have turned up the volume on their calls to the Fed to lower interest rates. Even Barney Frank, chairman of the House Financial Services Committee, has weighed in, urging a “meaningful” cut. So the Financial Times comment today by Raghuram Rajan, professor of finance at the […]
Read more...The problem with being a night blogger is that one is either early or late on the day’s news. Apologies for being late to turn to the Financial Times’ Martin Wolf’s article on what he describes as “the first crisis of our brave new world of securitized financial markets.” The piece is in the form […]
Read more...It’s always dangerous for mere mortals to take issue with Serious Economists, but let’s start with Brad DeLong’s thesis (hat tip Mark Thoma): The fact that there is even a small liquidity crunch for banks implies larger liquidity crunches for less intensively regulated financial institutions, and even greater liquidity crunches for manufacturing and real-estate companies. […]
Read more...John Dizard, in today’s Financial Times, tells us why, despite the fact that a lot of fixed income paper is on offer at very cheap prices, no one seems to be stepping to the plate. And his explanation bodes ill for things turning around very soon. The simple story is that even though the buys […]
Read more...Below are some excerpts from a good piece by Kenneth Rogoff on the Guardian’s website, which discusses why Bernanke thinks the Fed has no business worrying about asset prices, but argues that the lousy quality of macroeconomic data means policy makers ought to consider the information embedded in market prices: A bit of intellectual history […]
Read more...Financial Times columnist Wolfgang Munchau, in “Prepare for the credit crisis to spread,” tells us that the credit crunch is likely to get worse, since credit problems will spread to credit card receivables and car loans, both of which are typically securitized, and collateralized loan obligations (read takeover debt) also look shaky. Munchau argues that […]
Read more...Apologies for the heavy reliance on the Financial Times today, but the pickings elsewhere are meager indeed. The FT has an interesting juxtaposition of stores on its website tonight. The lead story, from the Fed’s Jackson Hole conference, reports that Bundesbank President Axel Weber described the current credit crunch as resembling a bank run, but […]
Read more...Jim Hamilton should get an award for his remarks today at the Federal Reserve’s conference at Jackson Hole. His talk sought to step away from the issue du jour, namely what if anything, to do about housing, and look at larger structural and regulatory concerns. He brought up uncomfortable issues, in particular, the rising level […]
Read more...In a paper presented at the Fed’s Jackson Hole conference, Federal Reserve governor Frederic Mishkin urged central bankers to respond quickly and aggressively to large falls in housing prices, arguing that it was less effective to wait to see the impact of falling housing prices on the economy. Mishkin disputed the notion that consumer use […]
Read more...I hope you don’t think this blog is in danger of becoming the “all Fed, all the time” channel, but this is an otherwise slow news period and central bankers are very much in the spotlight. Willem Buiter has a long post on his blog which discusses the Fed’s limited independence compared to other central […]
Read more...Bloomberg tells us that the commercial paper market is shrinking rapidly.This is a more serious issue than might appear. Commercial paper is an important, if not the most important, source of short-term funding for sizable corporations, mainly because it’s cheap and flexible. They can reading adjust the amount outstanding to reflect changes in their need […]
Read more...Frankly, this is pathetic. If Bernanke and his minions can’t take the heat of some well-deserved criticism from the highly-regarded Martin Wolf of the Financial Times, they don’t belong in public service. To recap: yesterday, Wolf issued a stinging rebuke of Bernanke’s conduct on the Financial Times editorial page, in “Central banks should not rescue […]
Read more...It must be miserable to be a central banker these days. Not only are they confronted with the worst mess in at least a generation, but too many interested parties, from the financial services industry to politicians and some members of the media, expect them to deliver the impossible, namely status quo ante. The reassessment […]
Read more...Oh, I do so enjoy it when the Financial Times’ chief economics editor, the normally measured and thoughtful Martin Wolf, works himself into a lather. Wolf blasts what he reads as the Fed’s vow of last week, uttered by Senate banking committee chairman Christopher Dodd, to keep the markets afloat (Dodd’s exact words were that […]
Read more...Today, in a comment at the Financial Times, “This is where Freddie and Fannie step in” (subscription required), Harvard’s Larry Summers argued that the subprime crisis highlights three questions. Most commentators focused on the one question he not only posed but answered, namely, what role government should play in aiding the flow of credit to […]
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