Category Archives: fiscal and monetary policy

Australia: Ahead of the Regulatory Curve

Which country is most ahead of the regulatory curve these days? A couple of
recent developments suggest that it might be Australia.
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Rescuing Libor

The credit crunch started in the subprime market, but it seems that nowadays it’s most visible, and most problematic, in the money market.
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A Call for Central Bankers to Hang Tough

Yves Smith at Naked Capitalism submits: 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, … Continue reading

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Brad DeLong Argues That Central Banks Should Cut Interest Rates

Yves Smith at Naked Capitalism submits: It’s always dangerous for mere mortals to take issue with Serious Economists, but let’s start with Professor of Economics at U.C Berkeley Brad DeLong’s thesis (hat tip Mark Thoma): The fact that there is … Continue reading

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Bundesbank President Weber vs. White House on Housing Crisis

Yves Smith at Naked Capitalism submits: 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 … Continue reading

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Fed Governor Mishkin Urges Swift Action to Combat Housing Price Decline

Yves Smith at Naked Capitalism submits: 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 … Continue reading

Posted in banking, bonds and loans, fiscal and monetary policy, housing | 1 Comment

Commercial Paper Market Still in Distress

Yves Smith at Naked Capitalism submits: 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 … Continue reading

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Martin Wolf Takes Bernanke to the Woodshed

Yves Smith at Naked Capitalism submits: 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 … Continue reading

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Has Smoke and Mirrors Worked?

Yves Smith at Naked Capitalism submits: In an inspired bit of stagecraft, Senate Banking Committee Chairman Christopher Dodd reported today on a meeting with Fed chairman Ben Bernanke and Treasury secretary Henry Paulson that the Fed stood ready to use … Continue reading

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Did Bernanke Make a “Rookie Mistake?”

Yves Smith of Naked Capitalism submits: A Bloomberg story, in what may be becoming conventional wisdom, charges Federal Reserve Chairman Ben Bernanke with making a novice’s error: By lowering the discount rate and issuing a statement conceding threats to the … Continue reading

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Rate Cut Linkfest

Some links to good posts on the Fed’s latest move.
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The Fed Kills the Shorts?

Traders were supposedly heavily on the put side today, an options expiration day, so the stock market response to the Fed’s discount rate cut seems surprisingly subdued.
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Pearlstein Looks for a Fed Bailout

If financial markets are frothy for a while and then revert to sensible levels
but don’t overshoot – then does that constitute a fully-blown
financial crisis?
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Chart of the Day: Fed Funds

Who says that the Fed hasn’t cut the Fed funds rate between meetings?
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How The Fed Can Avoid Cutting Interest Rates

I like the idea of the Fed cutting its discount rate – which is currently at 6.25% – rather than the Fed funds rate.
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Fed Announces It Will Do Its Job

Over the course of the Great Moderation, a lot of people forgot the difference
between the Fed funds target rate (that’s the number set at FOMC meetings) and
the actual Fed funds rate (the actual, real, interest rate). No one forgot about
that difference this morning, when the Fed funds rate was standing
at 6%
.
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Abolish Mortgage-Interest Tax Deduction, But Not Now

Matt Cooper is 100% right, today, when he says that we should
abolish
the mortgage-interest tax deduction
.
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Why Fed Funds Futures Might Not Reflect Fed Expectations

To
get an idea of where the market thinks that the Fed is going to be in six or
nine months, all you need to do is look at the Fed funds futures contract. Right?
Maybe
not
.
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Why the Subprime Mess Doesn’t Require a Fed Rate Cut

Brad DeLong has
capitulated
.
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The Fed Chairman Always Votes With the Majority

Why the need for the Fed chairman always to be in the majority? I can’t think of a single good reason, and in fact I’m having difficulty even coming up with bad reasons.
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Larry Summers: The Pundit Without Policies

Summers falls short of promulgating economic policies which might reduce inequality.
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Closing Private-Equity Tax Loopholes

There’s really no reason why hedge fund managers and private-equity billionaires deserve the kind of tax treatment that they’re basking in at the moment.
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Taxing Paris Hilton

Paris Hilton is actually a money-making machine.
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Fed: Still Credible

The market increasingly sees a rate hike as possible, but it’s a long way from seeing a rate hike as necessary. The Fed is still ahead of the curve here, which means that its credibility, at least for the time being, is not at issue.
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On Central Bankers’ Circumspection

Greenspan was never very good at explaining what he was doing when he did have power.
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