The Financial Times – Gillian Tett: Five questions for the Fed and Treasury There is, however, one notable exception: the mighty Federal Reserve and Treasury. In recent weeks, senior officials at both institutions have warned in general terms about the risks of failing to raise the debt ceiling. They have also tried to reassure investors… Continue reading Is There A Backup Plan?
The Financial Times – US default would spell turmoil for the repo market Concerns are mounting that the US could default on its debt obligations if no agreement is reached on the country’s debt ceiling. But what exactly would be the consequences? The repo market would take a big hit for a start. What will… Continue reading The Repo Market
The Wall Street Journal – T-Bills on the Brink Holders of First Treasurys Due After Aug. 2 Face Uncertainty Risk-averse holders have bailed out of the bill, as well as others maturing in coming weeks, on the off-chance they may not be repaid. That has taken the Aug. 4 bill on an unexpectedly wild ride.… Continue reading Treasury Bills And The Debt Ceiling
CNN.com – Debt ceiling fiasco risks double-dip recession Economists say the debt ceiling debate has already damaged the U.S. economy, and many worry that a deadlock could send the country hurtling into a double-dip recession. “Growing uncertainty about the ultimate outcome inevitably has some negative effect on business capital investment and hiring as the August… Continue reading A U.S. Default Will Be Bad!
Fox Business – S&P: $4 Trillion is Only a Start FOX News’ Brett Baier, James Rosen and Mike Emanuel caught this interesting disclosure S&P sovereign-rating chief John Chambers made on a conference call today. FOX Business’s Peter Barnes caught this tip, too. The “webinar was held for investors on state and local governments and pension… Continue reading S&P Suggests A Downgrade Is Coming
The Wall Street Journal – Default Worries Dry Up Lending Rising signs of strain emerged across financial markets on Thursday as investors pulled out billions of cash out of money-market funds, in turn driving the funds to rein in lending in short-term markets. Financial markets have become increasingly alarmed at the deepening divide in Washington… Continue reading Money Market Funds
Bloomberg.com – U.S. Downgrade May Cost $100B a Year: JPMorgan Political wrangling over a plan to reduce the deficit may cost the U.S. its AAA rating, adding $100 billion a year to government costs while dragging down economic growth, according to Wall Street bond dealers. A U.S. credit-rating cut would likely raise the nation’s borrowing… Continue reading The Cost Of A U.S. Downgrade
The Washington Post – Mohamed A. El-Erian: After the debt-ceiling standoff is resolved When the debt ceiling is finally increased, our political leaders should lose no time in trying to channel this surge of popular activism into a force to improve prospects for the economy. This should be done through a more informed national dialogue… Continue reading Mohamed El-Erian Speaks
The Economist – The euro crisis Bazooka or peashooter? Greece’s new bail-out helps, but should have gone further The second bail-out will improve Greece’s debt burden, although improvement is an elastic concept. The new package will stabilise Greek debt at about 150% of GDP over the next ten years (see chart 1), according to Barclays… Continue reading Europe
The Economist – The language of bubbles: Word herd Financial journalists’ writing becomes more homogenous as markets rise In a recent paper Aaron Gerow of Trinity College, Dublin, and Mark Keane of University College Dublin, found that changes in the frequency distribution of English words can be helpful in identifying stockmarket bubbles. The researchers looked… Continue reading How Financial Journalists’ Writing Can Help Identify Bubbles
CBO.gov – Analysis of the Impact on the Deficit of the Budget Control Act of 2011 as Proposed in the House The Congressional Budget Office has estimated the impact on the deficit of the Budget Control Act of 2011, as posted on the Web site of the Committee on Rules on July 25, 2011…In total,… Continue reading Washington STILL Doesn’t Get It, It’s About Downgrade, Not Default