The Wall Street Journal – Battle of the Impotent Central Banks Major central banks are outdoing each other to cope with the aftershocks of the financial crisis, revealing the limits of their power with every move. The Bank of Japan fired the latest salvo. It announced a new stimulus program, and a three-month extension of… Continue reading Is The Federal Reserve Out Of Bullets?
The Wall Street Journal – TARP and the Continuing Problem of Toxic Assets We should have eaten those toxic assets instead of sweeping them under the carpet. The Troubled Asset Relief Program (TARP) was a foolish bait and switch. To prevent the 2008 financial crisis from worsening, TARP was originally designed to buy toxic mortgage… Continue reading Revisiting TARP
The Financial Times – Beware those who think the worst is past We have analysed data on numerous severe economic dislocations over the past three-quarters of a century; a record of misfortune including 15 severe post-second world war crises, the Great Depression and the 1973-74 oil shock. The result is a bracing warning that the… Continue reading Reinhart Examines Post-Recessionary Periods
BusinessWeek – Gold’s Evangelist “I’m not a goldbug, but there are times when I feel like an evangelist for it,” says Thomas Kaplan, an Oxford-educated historian and chairman of Manhattan-based Tigris Financial Group. “To my amazement, it’s a hard sell. The conventional wisdom is that gold is for primitives. That derision shows me that contrary… Continue reading Is This A Contrarian Indicator?
<Chart courtesy The Chart Store> The Wall Street Journal – Bargains on Failed U.S. Banks Are Over Despite the brisk pace of bank failures this year, the bargain bin of financial institutions is a lot pricier than it was a year ago and the pickings are slimmer. Investors scouring the U.S. for failed financial institutions… Continue reading Bargain Hunting At Failed Banks
The Wall Street Journal – The Siren Song of Low Bond Yields Extraordinarily low bond yields signal a grim economic outlook. But for governments, there is a silver lining. For a while at least, they can trim interest bills even as they ramp up borrowing. A combination of near-zero official policy rates, central-bank bond purchases,… Continue reading Governments Benefit From Low Yields
The Wall Street Journal – Short Sellers Take a Long Vacation Short sellers stayed on vacation this summer, even as the U.S. economic outlook darkened. Since April, investors placing bets that the U.S. stock market will go down have been noticeably absent. Oddly, their departure coincides with an increasing flow of sluggish economic data that… Continue reading Where Are The Short Sellers?
Counterpunch – Dean Baker: Pierce the Housing Bubble Virtually the entire economics profession insisted on ignoring the housing bubble as it expanded to ever more dangerous levels. Remarkably, even after the bursting of this bubble wrecked the economy and has given us the worst downturn in 70 years, most economists are still determined to ignore… Continue reading Should Housing Prices Fall More?
The New York Times – In Striking Shift, Small Investors Flee Stock Market Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market. Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund… Continue reading The Death of Equities
Bloomberg.com – Caroline Baum: Monetarists Follow Milton Friedman to the Grave Milton Friedman, Nobel Laureate in Economics, died in 2006. Monetarism, the school of thought he founded, seems to have died with him, judging from recent comments. Academics, such as Princeton’s Alan Blinder and Harvard’s Martin Feldstein, are claiming there’s very little the Federal Reserve… Continue reading Two Views On What More The Federal Reserve Can Do
The Wall Street Journal – Robert Barro: The Folly of Subsidizing Unemployment My calculations suggest the jobless rate could be as low as 6.8%, instead of 9.5%, if jobless benefits hadn’t been extended to 99 weeks. To get a rough quantitative estimate of the implications for the unemployment rate, suppose that the expansion of unemployment-insurance… Continue reading Subsidizing Unemployment