Comment Yesterday we hosted a conference call. The links can be found here: Handout Audio Webcast Note: The section on agency excess returns over Treasuries between minute 20:00 and minute 22:00 was based on a mathematical error in a spreadsheet. Please disregard this portion. A correct discussion can be found here.
The Wall Street Journal – Bernanke Defends Record On Lehman Federal Reserve Chairman Ben Bernanke told a panel examining the U.S. financial crisis that he had no options to prevent Lehman Brothers’ failure in September 2008 even though he knew its downfall would be “catastrophic” to the financial system and economy. The Lehman failure set… Continue reading Bernanke Defends Letting Lehman Fail
The Washington Times – Bernanke out of moves, critics say With interest rates near zero and the Federal Reserve already owning a large share of the mortgage and Treasury securities markets, many investors fear the central bank may be out of ammunition should the economy take a serious turn for the worse. But Fed-watchers say… Continue reading Is The Federal Reserve Out Of Bullets?
The Council on Foreign Relations – Greek Debt Crisis – Apocalypse Later The difference between Greek and German government bond yields can be used to estimate the market’s view of the likelihood of a Greek default. The chart above shows these probabilities over different time frames on three different dates. On April 30th, no European… Continue reading It’s Only A Matter Of Time Before Greece Defaults
Projectsyndicate.org – Kenneth Rogoff: Why America Isn’t Working As the US economy limps toward the second anniversary of the Lehman Brothers bankruptcy, anemic growth has left unemployment mired near 10%, with little prospect of significant improvement anytime soon. Little wonder that, with mid-term congressional elections coming in November, Americans are angrily asking why the government’s… Continue reading Ken Rogoff Speaks
Bloomberg.com – Caroline Baum: ‘Working Girl’ Big Idea Needed for 1990s Redux The U.S. economy remains almost comatose….The current slump already ranks as the longest period of sustained weakness since the Great Depression….Once- in-a-lifetime dislocations…will take years to work out. Among them: the job drought, the debt hangover, the defense-industry contraction, the (banking) collapse, the… Continue reading Is Economic Pessimism Bullish?
The Economist – Global economic policy: Monetary illusions Central bankers are not magicians. Don’t count on them to conjure up remedies if the rich economies flag With most governments unable, or unwilling, to offer more fiscal stimulus, central banks are left solely responsible for propping up the flagging recovery. The phenomenon is most obvious in… Continue reading Monetary Policy
The Economist – Sovereign debt: Wiggle room The IMF offers indebted governments some reassurance ONE consequence of the deepest recession since the Depression has been the biggest peacetime build-up of public debt the rich world has ever seen. Some reckon that the debt position of many rich countries is now unsustainable. It is a measure… Continue reading PIIGS
The Economist – The world economy: The odd decouple Theories about why some rich-world economies are doing better than America’s don’t stand up On August 27th America’s second-quarter GDP growth was revised down to an annualised 1.6%. That looked moribund compared with the 9% rate confirmed in Germany a few days earlier. America’s jobless rate… Continue reading Global Recovery – Is The United States Leading The Way?
Forbes.com – Nouriel Roubini: V-Shaped Dreams Evaporate The curtain has opened on Act II of our “Year of Two Halves”–RGE’s theme since the end of 2009–with the slowdown forecast for H2 2010 getting here a bit earlier than expected. Growth in Q2 2010 registered a very weak 1.6%, revised down from an original estimate of… Continue reading Double Dip Recession Or Can It Get Much Worse Than It Already Is?
BusinessWeek – Record Correlation Raises S&P 500 Vulnerability to Jobs Report Rising correlations show investors are ignoring relative values among industries and reacting to day-to-day signals on the economy, according to Mohamed El-Erian, the chief executive officer of Pacific Investment Management Co. The S&P 500 had the biggest rally in almost two months yesterday on… Continue reading Correlations
The Wall Street Journal – Michael Boskin: Summer of Economic Discontent The administration’s ‘summer of recovery’ has fizzled in almost every way imaginable. The growth rate is less than half what it was at this stage after the 1974-75 and 1981-82 recessions. How bad is it? In the data for the last few weeks and… Continue reading Summer Comes To An End – Obama’s “Summer of Recovery” Fails