The Fed never met a bubble it wasn’t keen to reflate. The latest wrinkle is that it is trying to learn from its old behavior, although most of us would disapprove of the lessons it has drawn. One of the cognitive biases in the readings of past crises is to attribute failure to official intervention, […]
Read more...One thing that has me troubled about the financial mess is the degree to which the powers that be are wedded to a system that it clearly broken. In part, that results from financial capture of the government apparatus by the banking industry. But an equally sticky problem is the attachment to a rather recent […]
Read more...Willem Buiter takes no prisoners, In his latest post, “The green shoots are weeds growing through the rubble in the ruins of the global economy”, he dispatches the idea that recovery is around the corner (citing Carmen Reinhart and Kenneth’s latest paper on the resolution of financial crises) and points out that the fiscal state […]
Read more...Alan Greenspan had a brief moment when he seemed capable of being redeemed, when he admitted before Congress that he was wrong about his assumptions that firms could regulate themselves. I have yet to see another central figure in the banking meltdown admit error. But he has now gone back to trying to salvage burnish […]
Read more...Not that they listen to him, sadly. Buiter famously told the Fed in a presentation at its Jackson Hole conference that it was guilty of cognitive regulatory capture. Buiter argues that the games the Fed and Treasury are playing, with the Fed providing loans and guarantees that properly should come from the Treasury, is bad […]
Read more...The Wall Street Journal tonight, in “As It Starts Programs, Fed Weighs How to Stop Them,” broaches the touchy subject of how Federal Reserve unwinds all the “support lending” initiatives it has underway and is on the verge of launching. In general, this piece is more wary of party line than the typical WSJ offering, […]
Read more...When some deemed the Fed’s move today to expand its balance sheet by as much as a trillion dollars plus as “shock and awe”, I recalled that when that term was first used, at the beginning of the US invasion of Iraq. The notion was a display of superior force would lead to quick capitulation. […]
Read more...Too much corn pone personal story, not enough real interview. But I must say, Bernanke is either an astoundingly self contained man or is on the best meds modern science has to offer. Paul Kedrosky thinks this appearance is either wildly bullish or wildly bearish, and is somewhat inclined to the former view. I see […]
Read more...As foretold, Goldman tops the list. From the Financial Times (hat tip reader Dwight): AIG paid out $22.4bn of collateral related to credit default swaps, $27.1bn to help cancel swaps and another $43.7bn to satisfy the obligations of its securities lending operation. The payments were made between September 16 and the end of last year. […]
Read more...The double-speak in this Wall Street Journal piece, “U.S. Weighs Further Steps for Citi.” is so thick that parsing it is like wading through mud. And I do mean to stress the attempts to obfuscate what is going on. Recall that the last retrade of Citi’s arrangement with the officialdom was initiated by the big […]
Read more...Even though I often take on the Wall Street Journal’s depiction of new stories, the flip side is that it does break significant news stories. Today is one of those days, although I wonder about an item this juicy hitting the wires on a Friday evening. Remember that the reason for shoring up AIG was […]
Read more...Reader M&M called my attention to a Bloomberg story I was really hoping to avoid, “U.S. Sets a Six-Month Deadline for New Bank Capital“. The opening: The government set a six-month deadline for the biggest 19 U.S. banks to raise any new capital deemed necessary after a mandatory review of their balance sheets. The regulators […]
Read more...Before readers start throwing brickbats at the mention of the name of Alan Greenspan, it’s important to remember that he has become the poster boy of the policy errors that lead to our financial mess. And that isn’t an accurate picture. This crisis had many parents, and even though Greenspan was one of the key […]
Read more...I cannot recall a major US policy initiative being met with as much immediate revulsion as the so-called Geithner plan. Even the horrific TARP, which showed utter contempt for Congress and the American public was in some ways less troubling. Paulson demanded $700 billion, nearly $200 billion bigger than the Department of Defense, via a […]
Read more...Even a casual market observer like your humble blogger has noticed the dramatic increase in Treasury bond yields from 2.5% on the 30 year bond to over 3.5% in a bit more than a month. I had assumed that the Fed, at its last FOMC meeting, would shed a bit of light on its December […]
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