Category Archives: Federal Reserve

Fed Setting Higher-Than-Stress-Test Bar for Exiting From TARP

Well, once in a while the authorities exceed my low expectations, and this is one of those instances. The Fed is insisting that the bank recipients of TARP fund meet a higher standard, in terms of balance sheet strength, than set in the stress tests. The banks are grumbling that this is not what they […]

Guest post: Central banks will face a Scylla and Charybdis flation challenge for years

Submitted by Edward Harrison of the site Credit Writedowns. Nearly a month ago, back on May 5th, I highlighted some testimony by Federal Reserve Chairman Ben Bernanke before congress in a post labelled, “Bernanke expects recovery later this year". In his testimony, Bernanke used the phrase ‘Scylla and Charybdis’ to describe the Federal Reserve’s policy […]

Philly Fed’s Plosser Not Keen re PPIP, Fed’s Quasi-Fiscal Role

The Financial Times has a brief write up of an interview with the head of the Philadelphia Fed, Charles Plosser. His remarks seem more anodyne than they really are: The Federal Reserve should not be involved in financing toxic assets that date from the bubble era, Charles Plosser, president of the Philadelphia Fed, has told […]

Fed Clueless Perplexed About Spike in Bond Interest Rates

Lordie, if this Reuters article is to be taken at face value, the Fed is even more detached from reality than I feared. The Fed does not understand why the Treasury bond market had a mini-panic last week. Is it that investors believe the “green shoots” story and are seeking riskier assets? Or is it […]

Guest Post: Keynesians, Please Exit Stage Left

Submitted by Rolfe Winkler, publisher of OptionARMageddonBack in February, amidst the neo-Keynesian rage to spend our way out of recession, I argued that stimulus wouldn’t stimulate. Pointing to the graph of the 10-year Treasury vs. 30-year mortgage rates I said that the government wouldn’t be able to flood the market with Treasurys without driving up […]

Bond Carnage, Muddled Inflation Thinking, and Fed Options

The Fed has a mess on its hands. Yields on ten and thirty year Treasuries have shot up in the last few days as investors have become fixated on burgeoning Treasury supply in coming months and years. and, as belief in the “green shoots” story is rising, a shift to riskier assets. In addition, while […]

Guest post: Marc Faber says “I am 100% sure that the U.S. will go into hyperinflation”

Submitted by Edward Harrison of the site Credit Writedowns. You have to hand it to Marc Faber; he knows how to grab your attention. Earlier this year, I posted a video of him saying “don’t underestimate the power of printing money“, a quote that has become mantra for me. Basically, he believes a rising tide […]

Is The Bond Hangover Cure of Inflation Worse Than The Disease?

Uncharacteristically for an economist, Wolfgang Munchau questions the conventional remedy for the debt millstone: use inflation to trash its value in real terms. Bondholders so often get shafted that it’s a predictable outcome. But is it wise? Munchau argues that regardless, the piper must be paid. If the powers that be succeed in creating meaningful […]

A Call For Greater Accountability For the Fed

It’s been obvious to anyone who bothered paying attention that the Fed is increasingly acting as an extension of the Administration, without the oversight and disclosure to which the Executive Branch is subject. For instance, only the Federal Reserve Board of Governors appears to be obligated to honor to Freedom of Information Act requests (the […]

Greenspan Says Banks Need More Capital

You have to give former Fed chairman Alan Greenspan credit for having no shame. Well, he did once look a bit rattled before Congress for about five minutes and ‘fessed up it never occurred to him that people would be so greedy as to pull so much cash out of companies so as to leave […]

Guest Post: Geither admits easy money did us in

Submitted by Rolfe Winkler, publisher of OptionARMageddon In an interview with Charlie Rose on Tuesday, Tim Geithner admitted the bubble was caused by Greenspan’s easy money policy. Unfortunately, Charlie didn’t ask the obvious follow-up: “why will this time be different? Why will Bernanke’s easy money policy lead to different results?” Here was the crucial exchange: […]

Federal Reserve Inspector General Unable to Answer Basic Questions on Where the Trillions Went

Rep. Alan Grayson asks Inspector General Coleman of the Federal Reserve some very basic questions of about various Fed programs and activities and gets nowhere. And the worse is that the IG isn’t stonewalling, but instead is clearly completely clueless. Watching the video, you get the impression that Coleman can’t name a program beyond the […]

Guest Post: "Why I’m Freaking Out"

This post is from reader Gonzalo Lira. Although I beg to differ with him on a couple of his observations, it’s certainly colorful and thought provoking. I give my quibbles at the end. Insofar as this burgeoning Millennial Depression goes, I’ve noticed there are two sorts of people: Ones such as myself, obsessively following every […]

Andy Xie: "If China loses faith the dollar will collapse"

It’s easy for Americans to pooh-pooh bearish talk about the dollar. Yet the sterling was once the reserve currency, and has fallen, what, by 80% since it lost its standing. With increasingly dubious accounting and lax enforcement, the US capital markets no longer stand out by virtue of being better regulated. Yes, they still may […]

Skill Loss in Banking

Banking has suffered a not-sufficiently-acknowledged loss of know-how on the lending side. Back in the stone ages when I got an MBA, there were a few fellow students from big commercial banks like Chase (and no former investment banking analysts, the two year posts for college graduates) and they had all gone through credit training. […]