As I have said before, the handoff from Bernanke to Yellen was significant not just in terms of background but also in philosophy and viewpoint. Both were strictly academic statisticians (they call themselves economists) but there was an immense shift about QE. To be fair, there is some evidence that thoughts about QE had changed during the last year of [...]
I usually ignore sentiment surveys as, to reiterate one more time, they do not mean what people think they mean (and certainly not how they are used). The ISM Manufacturing Survey, for example, has been on fire for most of 2014 in an almost exact mirror of 2011. And just like 2011, that told us very little about the state [...]
Next to Japan’s “unexpected” re-acquaintance with recession, the most serious indication of global economic distress has to be oil prices. And where commentary turned to “explaining” Japanese recession as related to a small attempt at fiscal discipline rather than the more debilitating flirtation with intentional debasement, convention surrounding the precipitous plunge in crude is desperately trying to direct toward “supply.” [...]
Sovereign debt is the tangible pivot by which everything in Europe depends. That speaks not just to persistent fiscal imbalances that remain, years later, unresolved, but the unspeakable financial equivalent to a doomsday scenario. The damage to the European economy from the last financial panic is slowly being revealed (as with the unrequited and un-criticized promises of central banks), which [...]
Apparently St. Louis Fed President James Bullard is aiming toward the myth of the FOMC as “data dependent.” It wasn’t all that long ago that he suggested a pause in rate “normalization” as credit markets were signaling the “dreaded” disinflation appearance. A few weeks is all it has taken to change his mind and put the monetary world right back [...]
The nature of liquidity under the eurodollar standard is to essentially link “markets” that outwardly seem to have little or no relation. You can see the synchronized ups and downs quite clearly but miss the ultimate connection, especially under the orthodox assumption of the world’s economies and their “natural” finance as mostly closed systems with only tenuous associations. If that [...]
With all the election post-mortems flying about, there really only needs to be reference to pre-mortems that predicted such results. Even typically leftist media outlets have seen the “message” for what it was. From The DailyBeast: Yes, the stock market is booming but overwhelmingly Americans are unhappy with their economic situation—and for good reason. Wages are stagnant and middle-class household [...]
With all of the credit market fireworks that leaked into stocks, the pace of economic reassurance from “authorities” has been rather steady and a bit more emphatic. Despite the attempts at managing perceptions, there has been very little actual success in persuading. In many ways this is like the unfolding ebola drama in that there is a palpable disconnect between [...]
When speaking about the costs of having undertaken numerous QE’s in the US, there is not only the economic inefficiency and asset price psychology to account in the tapering and ultimately exit (hopefully a permanent one this time, though I increasingly doubt it). There is little doubt that repo market problems, that have become far too persistent to be comfortable, [...]
In looking at the “portfolio effect” of monetary policy, monetarists always see benefits without costs. The one exception in recent years has been Jeremy Stein of the FOMC, who is no longer a member. It was his statement in February 2013 about “reach for yield” that seems to have set off something odd in the policy apparatus. Some of that [...]
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