The latest figures on housing construction have almost flipped the circumstances from late 2013. It was apartment construction that kept up hope that any retrenchment in single family construction would not be so devastating. Permit and start activity was, at the margins, almost totally dependent on multi-family construction to offset weakness in single homes. As of December 2014, the flattening [...]
The FOMC continues to posture as if the economy is good enough to allow the first “tightening” in policy since Alan Greenspan. If we have learned anything from the era of shadow finance and the global eurodollar standard, it is that in these unsettled times the true “money supply” of bank balance sheet mechanics behaves of its own accord. In [...]
It was bound to happen as the monetary affairs throughout the world “tighten.” The Swiss National Bank (SNB) had tied its fate, with good reason, to that of broader Europe but made the assumption that the ECB could accomplish both economic and financial goals. In 2011, that meant pegging the franc to the euro and using the SNB’s balance sheet [...]
As additional comparison for the current state of European credit, as you can easily get lost in the train wreck, I thought it interesting to include separately a wider perspective. I’m sure what I present below will make “sense” to someone at the ECB or one of the other central bank confederates in the context of monetary economics as it [...]
If the ECB is deliberately trying to prove how little efficacy it still may hold, they are doing an excellent job at it. There has been nothing but QE, QE and more QE in Europe since the New Year, which in the past might have at least courted some significant positive thoughts. If you recall back in September, at the [...]
Whatever bearishness existed prior to December, credit markets clearly shifted beyond to a heightened state of concern. That was not lost on the FOMC internal discussion regardless of what they state publicly, as the action in credit has taken now to levels unmatched by anything seen in the past five years – and it’s not like the past five years [...]
In light of what I detailed yesterday about the real reason the Fed is proclaiming economic success and an end to ZIRP, today’s minutes reveal a good deal of internal discussion leading toward that idea. The first part being that there is no wage growth today, and thus this notion of “transitory” non-inflation being nothing more than faith: Although a [...]
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 [...]
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 [...]
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 [...]
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