While this was meant to be anecdotal, giving the whole rise and fall of eurodollars an actual feel through actual published bank results, the more abstract collections of the derivatives world conforms very well with those singular sketches in JP Morgan and Goldman Sachs. The BIS, for example, publishes its estimates for the give and take of the gross notional [...]
The early 1990’s saw the S&L’s fail on wholesale means but also to be displaced entirely by the GSE’s and securitizations of also wholesale monetarism. Indeed, when LTCM failed in 1998 rather than recognize the glaring limitations evident in the systemic pathology the Fed looked at it the way it wanted, preserving itself at the apex of political-economic planning and [...]
In April 2013, Janet Yellen gave a speech still as the Vice Chair of the Federal Reserve. Her topic was communication, fitting in that it was given to the Society of American Business Editors and Writers. She expressed the evolution in Fed policy as it had changed since the more direct if silent beginnings in the early 20th century. Not [...]
What I set about to demonstrate in Part 1 was the visible spectrum of the wholesale system. In other words, you can see balance sheets grow and distort, with money dealing along with it, but that doesn’t cover the full dimensions on how and why credit production, especially through securities, bloomed as it did. This is, in many ways, the [...]
I often write about the rise and fall of the eurodollar standard in very abstract terms, largely because most of what occurs there is hidden, opaque and/or terribly abstract. The difficulty is in trying to define and describe “money” under just such a pliable system, a task not easily solved by current conventions. For instance, it was the trend in [...]
Yesterday, I briefly surveyed the outward credit risk portion of the “dollar” financing process, so it makes sense to update interbank risk. As you might expect, given hints of redrawing liquidity and a “dollar” disruption, interbank rates jumped in the early part of June. Even the federal funds rate (effective) moved up to 14 bps, the highest fix since early [...]
There weren’t any surprises in the “final” GDP update for Q1. Going back to -0.2%, the same interpretations still apply, especially and including the inventory contribution. Economists and policymakers want to talk particularly about how Q1 is prone to “residual seasonality” but that is missing the bigger part of the problem. Whether Q1 was -0.2% or +2% doesn’t really matter, [...]
There have been, in the past year, two great inflections in wholesale finance. The first was in late June as the “dollar” began to rise, thus signaling a massive shift in balance sheet mechanics, the modern “money supply” that so confuses economists. That is why they at first enthusiastically embraced the “strong dollar” as that anachronistic interpretation seemed on the [...]
There has been a quiet Tobin revival which mirrors the unsuitability with which monetarism has found itself in a serial bubble world. I am referring to James Tobin, who did some great monetary theory back in the 1960’s when IS-LM and the “exploitable” Phillip’s Curve were groping for monetary relief. Specifically, money was believed to be a constraint in the [...]
This morning HSBC announced plans to radically downsize its cost structure, mostly through cutting jobs. Most of the attention so far has been on the bank’s plans to use the expected profit boosts to fund a period of rising dividend expansion. Immediately, as a business, there is a bit of a conflict in that attempt as typically expanding dividends and [...]
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