Yves here. As much as the post below is a very useful recap of data in terms of the impact of QE, I need to hector “Unconventional Economist” for being pretty conventional. His headline question, whether intentionally or not, reinforces the notion that it was reasonable to think that QE, or super low rates generally (as in ZIRP) would lead to increase lending….
Read more...Macrobusiness flagged a short interview with Ann Pettifor, a highly-regarded international finance expert who is the Director of Policy Research for Macroeconomics on the ABC program The Business. Pettifor argues that economists are responsible for the bias today to over-rely on monetary policy to solve problems that can only be addressed by government spending. Leaning too heavily on monetary policy to try to address weak growth simply generates asset bubbles.
Read more...You know something is going wrong when the heads of the largest fund manager in the world and the largest bond management firm simultanously scream ”bubble”.
Read more...Nothing like watching a captured regulator like the Fed use a public hue and cry to execute a big bait and switch. Here the ploy is to change rules to further disadvantage the parties making complaints. But it takes finesse to make the finger in the eye look plausible and reasonable, so that when the well-understood bad effects show up later, the perp can pretend to be mystified.
Read more...Congressmen Alan Grayson and John Conyers have published a well-thought-out proposal on bank equity, with the objective of assuring that when banks do stupid things (which they do with great regularity, even before the era of casino banking, they’d embrace some new fad and run off the cliff together, like lemmings), they have enough capital to absorb losses. And that means a lot more capital than regulators are demanding they have now.
So I urge you to co-sign their letter (full text below) at http://nobankwelfare.com/.
Read more...Yves here. This Real News Network interview with Yilmaz Akyüz, chief economist at the South Centre and former director and chief economist at UNCTAD, focuses on the conundrum of the Fed’s need to exit from QE from an international perspective, and layers in the further complication that China is not going to keep up its investment spending at the same level. Akyüz argues that “….we have problems at the end of the crisis which are as big as the ones during the crisis, and these problems are largely due to mismanagement of the crisis, particularly in the U.S. and Europe.”
But I’m not sure it’s as simple as mismanagement.
Read more...On Thursday, a former bank examiner at the Federal Reserve Bank of New York, Carmen Segarra, filed a suit (embedded at the end of this post) against the New York Fed and several of its employees alleging, among other things, improper termination. The complaint is a doozy and some of the additional details supplied by Segarra to ProPublica make an already ugly picture look even worse.
Read more...By Dan Kervick, who does research in decision theory and analytic metaphysics. Cross posted from New Economic Perspectives
Evan Soltas is hoping that President Obama’s appointment of Janet Yellen signifies a new administration commitment to jobs and economic growth.
Unfortunately, Soltas seems to be one of those folks who is convinced that our failures over the past five years have much to do with a monetary policy that has been insufficiently “accommodative”. That’s just another version of the “if you only have a hammer, every problem looks like a nail” thinking. If you think the Fed has to fix the economy, sure, you’d think the Fed hasn’t done enough. But the Fed isn’t in a position to pull us out of this ditch, and Yellen should quit enabling the idea that it can.
Read more...Most of the news accounts of Obama’s nomination of Janet Yellen as the next Federal Reserve Chairman focused either on what type of monetary stance she was likely to take or on biographical details.
But some writers have used the upcoming changing of the guard at the Fed to look at the bigger question of the Fed’s role, particularly now that it has continues to intervene in financial markets to an unprecedented degree, a full four years after the worst of the financial crisis had passed.
Read more...Overnight market action shows that nobody really has a clue about the Fed taper any longer.
Read more...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”.
Read more...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.
Read more...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.
Read more...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.
Read more...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.
Read more...