Economics One (blog) – John Taylor: Taylor Rule Recommends Raising Rates Over here at Economics One, I can report that the Taylor Rule says that the fed funds rate should now be 1 percent, and I can provide the calculations. Available data (through the 1st quarter) show that the inflation rate is about 1.6 percent… Continue reading The Taylor Rule
The Wall Street Journal – The Housing Illusion Since the housing market began to turn in 2007, Washington has tried to keep prices from falling with every policy gimmick known to politics: Foreclosure mitigation, more guarantees from the FHA, higher guarantee thresholds from Fannie Mae and Freddie Mac, Fed purchase of mortgage assets, and the… Continue reading Housing
The Financial Times – Ignoring the core can keep inflation at bay A check of the data since 1999 shows that, apart from the 2008-09 recession and a few months of 2002, headline inflation is always higher than that of core inflation, both in Europe and the US, with a cumulative difference over the past… Continue reading Core vs. Headline Inflation
Slate – The Rent Isn’t Too Damn High Why it’s good news that more Americans are renting rather than buying homes According to a USA Today analysis of Census data released this weekend, since 2006, the number of households that rent has grown by about 700,000 a year, while the number of households that own… Continue reading Rising Rents
The Wall Street Journal – Economy Needs a Borrower of Last Resort A lack of funds isn’t hampering the U.S. economy right now. It is a lack of demand for them. That is why the Federal Reserve has so little to show for its latest government-bond-buying program, which was launched last November and winds down… Continue reading Loan Demand
The Wall Street Journal – Auto Bailout Cost $14 Billion The White House said Wednesday that taxpayers could lose roughly $14 billion of the money spent on auto industry bailouts, despite the industry’s recent recovery. The White House cites the potential losses in a report, “The Resurgence of the American Automotive Industry,” released ahead of… Continue reading Auto Bailout Losses
MarketBeat (WSJ Blog) – Bond-Buying Frenzy Biggest in At Least Two Years Bill Gross must feel especially lonely today, or at least like the only frog not having fun in the boiling water. So many frogs jumped into the pot today that Treasury volume might have set a one-day record, according to IFR Markets’ read… Continue reading Bond Market Volume
Bloomberg.com – Fed Owes U.S. Stakeholders Accounting on Loans as People’s Bank So why does the Fed continue to keep Congress, and the rest of us, in the dark about the way taxpayer money was used? Last week, Bloomberg News’s Bob Ivry reported that in 2008 Credit Suisse Group AG (CS), Goldman Sachs Group Inc.… Continue reading Federal Reserve Transparency
The Wall Street Journal – John Taylor: In Praise of Debt Limit ‘Chicken’ Top economic officials in Washington continue to argue that Congress should vote to increase the debt limit without any commitment to reduce spending growth—in other words, a “clean debt limit hike.” They compare linking the debt limit and spending reductions to playing… Continue reading The Debt Ceiling
The Wall Street Journal – Get Ready: Here Comes the Yuan The wall is starting to crack. For years, China has made it tough for capital to flow to and from its economy, the second-largest in the world. Now, the government in Beijing is forging ahead with a campaign to bring the yuan onto the… Continue reading The Yuan
h/t The Big Picture
Yahoo Finance – The Euro Will Survive, Even Though It Shouldn’t: Jim Bianco First, the good news. European unity is alive and well across the pond and, while strained, the world’s youngest major currency, the euro, will survive. And the bad news? We still have another month of negotiating to listen to as European central… Continue reading Should The Euro Survive?