There was a lot to talk about at the last FOMC meeting, where most are focused on “patience” and all that about rate hikes. Less discussed and analyzed, as these areas are often difficult to parse for outsiders, was the fact that the savior of rate “normalization” has been totally and completely put out to pasture. The reverse repo program [...]
In March 2009, only two days after the exact bottom in US stocks, Alan Greenspan took the pages of the Wall Street Journal to declare, declaratively, that the Fed was not to blame for the catastrophe. His “evidence” was based on this single supposition: The second, and far more credible, explanation [for the housing bubble] agrees that it was indeed [...]
The Fed is simply making it up as it goes, with nary a concern about being questioned on what is really disingenuousness. That starts with oil prices as there have been a number of Fed officials rushing to embrace them as some kind of “stimulus” that nobody outside a monetary magician (redundant) could perform. Orthodox economics despises “deflation” to its [...]
The “inflation” results out of Europe this morning highlight and emphasize the disingenuousness at the heart of monetary economics. While some of the “peripheral” nations (as if they are less European) are deeply into “negative inflation”, Germany (as if it is more European) has been an almost singular source of what the ECB views as a standard. However, even Germany [...]
The rash of “unexpected” declines in PMI’s this morning in the US, of all places, seems to have abraded at least somewhat the pervasive belief in the American “decoupling.” As I have said before, I afford little validity to PMI’s as anything other than potentially a relative measure of changes, not magnitudes, in shorter-term circumstances. That is why the most [...]
One of the most curious aspects of the FOMC’s apparent rush to end its “accommodation” is the distinct lack of any market-based reinforcement. Using only statistical analysis of economic accounts, the Fed is, in effect, saying that it is ignoring all market indications contrary to its main assessment. That extends not just to overall economic measures but also, referring to [...]
The stock market takes off in holiday celebration of the FOMC being even less clear than it really has been in some time; perhaps going all the way back to Alan Greenspan’s intentional mush. Equity “investors” are happy that the Fed may be happy about the economy, even though there is nothing in actual markets (outside of stocks) to suggest [...]
It seems Charles Dickens had a flair for 21st century economics all the way back in the 19th century. Writing in his book Little Dorrit (thanks to W Krauss for the reminder) he observed that credit systems tended to be, “…a person who can’t pay, gets another person who can’t pay, to guarantee that he can pay.” The first person [...]
The amount of credit market fireworks this week is only surpassed by those of October 15. Everywhere you look, credit markets are not just growing bearish but, as I said earlier in the week, bearish in comparison with past crisis periods. The past few days have surpassed even that observation, making credit now a fast-moving indicator of still nothing good. [...]
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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