We have from time to time chronicled how various Treasury and Federal Reserve interventions have produced unintended, undesirable consequences. The latest example: the Fed’s efforts to push Treasury rates into ZIRP-land is reducing the incentives of traders to repo Treasuries to each other. That then reduces liquidity in the Treasury market. Consider the boldfaced statement […]
Read more...The Fed made official its move to quantitative easing today, and said it will take no prisoners until it has lowered rates and credit spreads further: The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability… The focus of the Committee’s policy going forward […]
Read more...I’m reproducing the bulk of a very good (and possibly final) post by London Banker, a former central banker and securities regulator, that takes issue with some of the conventional wisdom surrounding the efforts to remedy our economic crisis via liberal applications of monetary easing and fiscal stimulus. I happen in general to be sympathetic […]
Read more...A story on Bloomberg, “Q Ratio Signals ‘Horrific’ Market Bottom, CLSA Says,” argues that the global equity market bottom will be well below the recent lows, but also thinks we may not see it until 2014 as the current pump priming measures hold off deflationary pressures for a while. Note that Gary Shilling, who was […]
Read more...The Wall Street Journal, in a typically anodyne bit of reporting, tells us that the Fed is considering selling its own debt to finance its balance sheet, Its good old buddy, the Treasury Department, which heretofore has been selling bills in part on behalf of the Fed, now has a big enough financing calendar in […]
Read more...The Wall Street Journal reports in a story frustratingly sketchy on key details that AIG has sprung another leak, or more accurately, had an ongoing leak that has just now come to light. The amount at issue, $10 billion, seems small compared to the $150 billion the insurer has already managed to extortsecure from the […]
Read more...Sometimes guest blogger Lune sent us a piece on a post by Willem Buiter, “Stigma, Schmigma,” that I had included in Links last night. I had been tempted to comment on it, but events intervened, and Lune independently took up the mission. From Lune: Willem Buiter does a great takedown of the Fed’s policy of […]
Read more...You simply cannot make this up. I found a section of this priceless commentary from the Reserve Bank of Zimbabwe via Marc Faber’s latest newsletter (hat tip reader Dean), and had to verify it. The original provides an even richer mine of material. From the Reserve Bank of Zimbabwe (boldface theirs): As Monetary Authorities, we […]
Read more...Let’s see, Bloomberg said yesterday that the Federal government had committed $7.4 trillion to lending facilities and guarantees. The total is now $8.2 trillion thanks to new programs announced today to aid borrowing by consumers, small businesses, and homeowners. Stocks have rallied, and the 30 year bond is also up three points, due to a […]
Read more...Remember how, post 9/11, President Bush urged patriotic Americans to go to the mall? It appears the officialdom is fond of time-tested remedies. Bloomberg tells us that the Fed and Treasury have a plan,, using TARP funds, to get consumers to spend again by supporting consumer lending. There are a few problems with this approach: […]
Read more...One topic we’ve mentioned from time to time is the near disappearance of the debtor in possession financing market and why that is a more serious matter than its dry name might suggest. When large companies seek to use Chapter 11, typically they are broke (duh) as in out of cash. Chapter 11 takes time, […]
Read more...As correspondents and readers have pointed out, Fed chairman Ben Bernanke and the rest of DC is increasingly resorting to the playbook he suggested in various papers on Japan’s deflation. The Federal government has said that it is willing to lend or backstop up to $7.4 trillion to get the credit markets moving again. This […]
Read more...A nice article in the Financial Times by Wolfgang Munchau, “Double jeopardy for financial policymakers,” discusses the Federal Reserve’s move to quantitative easing. There has been some mention of this in the media, as a Bloomberg story from last week indicates, but it hasn’t gotten the attention it deserves. The use of quantitative easing is […]
Read more...Ah, the US keeps inching its way into the behaviors of post-bubble Japan. The latest pending regulatory move it to reduce failures to deliver securities in the Treasury repo market, a vital source of short-term financing for banks and broker dealers. But the remedy under consideration would lead to negative rates on some repos. a […]
Read more...Oddly, I saw this comparatively late (about an hour), and no notice Bloomberg, which is perfectly willing to pick up news reports by competitors with attribution, and Asian markets ex Japan (closed today) were still in negative territory, although slightly less so. Note key element of the deal is that the Federal government will guarantee […]
Read more...