In January 2018, Bill Gross was at it again. Famous for being the longtime public face of PIMCO, he’d acquired as much notoriety for being the boy who cried bear. By the way he talked and by what he predicted, you’d have to think the US Treasury had visited some horrible circumstance on a young Bill early in his life. [...]
Curiously short on star power, the Jackson Hole gathering this year has already taken an odd turn. It’s been practically subversive. Usually when the Kansas City Fed gets together for these things each and every August, the main attraction is the top central bankers in the major economies. Outside of the Bank of England’s Mark Carney, this year there’s only [...]
It’s becoming fashionable again to dismiss manufacturing. In 2015, we heard repeatedly how it represented only 12% of overall economic output. Any minor problems affecting such a small slice would surely be nothing much for the other seven-eights of the economy to overcome. There was no way Yellen’s rate hikes and the booming recovery they would anticipate would be derailed [...]
The entire basis for what the Fed is now calling a “mid-cycle” adjustment rests upon a specific view of the labor market. There was weakness in consumer spending, there remains weakness in business investment, but none of these cross currents or headwinds are going to matter. Americans are experiencing robust employment conditions which when these reassert themselves will cycle the [...]
For a cabal of superpatient supergeniuses, the Chinese tend to play with fire quite often. According to many, the Communists have perfected the art of technocracy and are merely waiting out the impetuously free West. The dollar system will destroy itself (there’s the kernel of truth) allowing a perfectly positioned China to swoop in and rescue the global economy with [...]
The Economics textbook says that when faced with a downturn, the central bank turns to easing and the central government starts borrowing and spending. This combined “stimulus” approach will fill in the troughs without shaving off the peaks; at least according to neo-Keynesian doctrine. The point is to raise what these Economists call aggregate demand. If everyday folks don’t want [...]
Following up on yesterday’s look at the concept of repo reserves. These are, as hopefully that narrative retelling established, very different from the inert byproducts of QE; or, bank reserves. The explanation for record low and negative yields amounts to a pretty intuitive process, though in practice it is incredibly complex. Sovereign bonds as “pristine” repo collateral (what some Economists [...]
Always aspiring to technocratic greatness, China’s Communist Party is set up to run like clockwork. It’s supposed to go off in predestined fashion, a course programmed into the vast apparatus by highly proficient experts. It is, or is supposed to be, comforting that order and control over the complex main spheres of daily life can be managed down the detail [...]
It was truly startling when it was announced. The second and more dangerous phase of the Global Financial Crisis had begun on July 15, 2008. Within two weeks, Merrill Lynch had etched its name on the growing list of “troubled” institutions. On July 28, 2008, Merrill Lynch agreed to sell $30.6 billion gross notional amount of U.S. super senior ABS [...]
The Chinese have been reforming their monetary and credit system for decades. Liberalization has been an overriding goal, seen as necessary to accompany the processes which would keep the country’s economic “miracle” on track. Or get it back on track, as the case may be. Authorities had traditionally controlled interest rates through various limits and levers. It wasn’t until October [...]
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