Posts filed under “Bailouts”
One of my favorite thought experiments is the careful-what-you-wish-for scenario. I was reminded of its utility during Federal Reserve chief Janet Yellen’s Congressional testimony the other day.
Consider the critique of the Fed by some members of Congress. As the New York Times described it, the three-hour hearing was “testy” as “Republicans on the House Financial Services Committee accused Janet L. Yellen, chairwoman of the Fed, of using her office to advance liberal policy goals.”
I find it rather surprising that the Fed’s mandated goals of containing inflation (check!) and reducing unemployment (check!) are deemed liberal. That is how topsy-turvy the partisan world of Washington has become during the past decade.
“You’ve already made monetary policy a partisan political exercise,” declared Representative Scott Garrett, a New Jersey Republican, in a partisan political response to Yellen’s House testimony yesterday.
The upside-down worldview that statement reflects seems to be lost on the Congressman. It’s an exercise in massive projection. No wonder Congress’s approval ratings keep breaking all sorts of record lows.
I suspect the contingent in Congress that wants to audit the Fed really hasn’t thought through its goals. As we shall see below, the Fed bashers might not be happy with the results.
Morgan Housel makes the delightful if infuriating observation that bank execs take credit — along with fat paychecks and even fatter bonuses — on the way up. On the way down, its always seems to be someone else’s fault: Robert Rubin, a former Treasury Secretary, joined Citigroup in 1999 as chairman of the executive committee. He was…Read More
There has been a great deal written about Greece recently. I therefore, somewhat timidly, add my penny’s worth. The Syriza Party, through their PM and their finance minister, has rejected the idea of cooperating with the Troika, the EU, ECB and the IMF. They are seeking debt forgiveness to meet their election pledges to the Greeks population….Read More
Fascinating flowchart from Deutsche Bank: It is wrong to think that contagion stems only from Grexit. An excessive compromise with Greece could result in moral hazard, particularly in relation to structural reforms. This could undermine the medium-term stability of the euro area. The tail risk is that Greek politicians try to leverage too much the fear…Read More
Mr Draghi (Super Mario) delivered yesterday, despite the leaks which virtually gave away the details of his announcement ahead of the press conference. The EZ Central Banks (coordinated by the ECB), together with the ECB is to buy E60bn of government, ABS’s, covered bonds and agency debt, per month, commencing March 2015 up to at…Read More
The ECB said the combined monthly purchases which includes ABS and covered bonds and now include sovereign and agency bonds will total 60b euros per month and will continue to do so “until we see sustained inflation improvement.” The ratio will be based on the capital key where about half is made up of Germany,…Read More