Bloomberg.com – Caroline Baum: Only Fed Ensures Inflation Won’t Happen Here Consumers expect inflation of 3.2 percent in the next five-to-10 years. Investors expect 2.8 percent. Who’s right? And why should we care? We don’t know the answer to the first question. I will try to answer the second in 800 words or less. When… Continue reading Inflation Expectations
The Financial Times – Japan could use a dose of rising bond yields Japan’s recent twin disasters have prompted questions about the country’s ability to issue new debt to raise money to rebuild its ruined towns and infrastructure. Japan already has an enormous fiscal deficit – what would happen if it issued even more government… Continue reading How Would Japan Respond To Rising JGB Yields?
<Click on chart for larger image> Bloomberg.com – Matthew Lynn: Portuguese Bailout Costs More Than Money Alone Is it 50 billion euros? Or perhaps 70 billion euros? The cost of bailing out Portugal varies according to who makes the calculation. No one will know the real price until officials from the International Monetary Fund and… Continue reading Portugal
The Financial Times – Lex: Inflation: the high price of distortions Energy prices have doubled since the recessionary trough and food is up 40 per cent. The price story is largely financial: a large surplus of purchasing power (money and credit) running into a small shortage of supply. Conversely, in the US housing market, dwindling… Continue reading Core Inflation vs. Headline Inflation
The Financial Times – Lex: Bond defaults: is history bunk? How good a guide is history? If the future is like the past, then yields on debt issued by banks are too high. But the market is pricing a new normal, a worse one, for big banks. The divergence emerges from Deutsche Bank’s annual study… Continue reading Bond Defaults
The Financial Times – US muni bond demand slips into big freeze A feared meltdown has yet to materialise. Instead, the US municipal bond market, blighted by concern that struggling states and cities could default on their obligations, has gone into a deep freeze. Sales of new bonds have plunged as retail investors, traditionally the… Continue reading Munis
Bloomberg.com – Fed Presidents Support Completion of $600 Billion Bond Program Two Federal Reserve regional bank presidents voiced support for the completion of the central bank’s $600 billion Treasury securities-purchase program through June, saying it’s too soon to remove stimulus from the economy. Boston Fed President Eric Rosengren said yesterday that high unemployment and low… Continue reading Two Federal Reserve Presidents Respond To Bullard’s Request To End QE2 Early
Bloomberg.com – ‘Wall Street’ Director Stone Says Banks Still Selfish, Arrogant Almost a year after “Wall Street: Money Never Sleeps,” Oliver Stone says most bankers persist in being selfish and financial markets remain riddled with excess. The film director is still unimpressed by the practices of Wall Street’s financial gurus. He is working on a… Continue reading The Expert Has Spoken!
None Today
Real Time Economics (WSJ Blog) – Like The Phoenix, U.S. Finance Profits Soar Not too long ago, during the depths of the global crisis, the finance industry was on the brink of collapse. How times have changed. Friday’s revisions to U.S. gross domestic product contained news on fourth-quarter profits. Top-line, or pretax, operating profits economywide… Continue reading Financial Profits
The Washington Post – Robert Samuelson: Why TARP has been a success story It isn’t often that the government launches a major program that achieves its main goals at a tiny fraction of its estimated costs. That’s the story of TARP — the Troubled Assets Relief Program. Created in October 2008 at the height of… Continue reading Arguing The Success Of TARP