As I so often write, we still talk about 2008 because we aren’t yet done with 2008. It doesn’t seem possible to be stuck in a time warp of such immense proportions, but such are the mistakes of the last decade carrying with them just these kinds of enormous costs. It has been this way from the beginning, even before [...]
On February 8, 2007, exactly one decade ago today, shares of New Century Financial, a former darling of not just Wall Street but the mainstream, plunged 37% in panicky trading. The day before, February 7, New Century reported expectations for loan production for 2007 to be 20% below 2006 levels. But the real bombshell was the reasoning for that guidance, [...]
In 2003, Nobel laureate Robert Lucas wrote admiringly in his Presidential address for the American Economic Association that the field of economics was itself a put-forward solution to the Great Depression. Such was the calamity that enormous intellectual effort was expanded so as to never repeat it. Though with that belated task there is also, or there at least should [...]
The main policymaking body of the Federal Reserve, the FOMC, has had a tortured relationship with eurodollar futures during this past decade. As I chronicled here in greater detail, starting in early 2007 the committee members decided that the deepest, broadest market in terms of money in human history could not possibly reflect accurate expectations. Ben Bernanke had told Congress [...]
The federal funds rate holds no relevance to anything actually useful and meaningful. That has been the case for some time, though pinning down exactly when federal funds became irrelevant is a bit of chore (I personally view it when altering Regulation M in 1990 created a regulatory par with eurodollars). Even the FOMC admits how actual finance has passed [...]
With the advance report on GDP for Q2 set to be released this week, economists are working hard to explain why it doesn’t represent the utopian delivery that they swear had already occurred via monetary intervention. There is, in immediate terms, the universal appearance of “residual seasonality” in the past few months as an almost complete revulsion to even the [...]
It is amazing the speed at which FOMC officials have embraced not falling oil prices but collapsing crude. The pace of the decline is being driven, contrary to the fracking miracle, by the fact that nobody seems to want to bid on the stuff. That is, as I noted earlier, a demand problem. But officials like Fed Vice Chair Stanley [...]
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