"More Democracy Needed at the United Nations" - @MartinSEdwards on how to reform the @UN #blogpost #Iran http://t.co/Te5BAKzpv7
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Category Archive: Global Macro
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Jobless Claims Down for the Second Week
As we move beyond the market panic, we can zero in on the data that define the economy. Employment is one of four key areas that define the economy — the others being production, earnings growth and consumer spending.
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Dow Falls 730 on Deteriorating Fundamentals, Evidence Rescue Efforts Not Taking Hold
Boy, that was short lived. The massive EU and US rescue efforts to pump equity into banks, the TARP, the increase in the Term Auction Facility (from $150 billion to $900 billion), the Fed offering unlimited dollar swaps to foreign central banks, and those monetary authorities themselves engaging in liquidity operations, appears to have come [...]
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The Hypocrisy of the Deposit Insurance
The U.S is going through a banking crisis and pulling the rest of the world with her. Almost all of the emerging markets have gone through similar banking crises in the last 15 years. Each case differs on some dimensions, except for the important role played by the deposit insurance that lead to moral hazard. A structurally unsound banking system combined with implicit government bailouts lead to excessive risk taking. This has been emphasized numerous times by academics, politicians and the IMF. The cure for these unhealthy economies—as goes the advice from the IMF and other doctors in the developed world—lies in breaking this cycle. This, they claim, should be achieved by extensive structural banking reforms, where deposit insurance must be reduced sharply.
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Countrywide Bondholders Settle; Paulson Bails as Next Wave of Approaches
Before we get to the evolution of the bailout, some pending business from the land of restructuring, where the Countrywide Financial saga continues. On or about October 10, 2008, Bank of New York Mellon (NYSE:BK) and mortgage lender Countrywide Financial, a subsidiary of Bank of America (NYSE:BAC), agreed to settle a Delaware Chancery Court lawsuit involving Countrywide [...]
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Preemption?
Caroline Baum says it’s time to reconsider the resistance to preemption – using monetary policy to pop bubbles before they get too big: Central Banks Reconsider Doctrine of Preemption, by Caroline Baum,Bloomberg: It is an article of faith that central banks can’t identify an asset bubble ex ante; that they don’t have better knowledge of [...]
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The global recession
IMF research economist Prakash Loungani reports some statistics on the extent to which housing price declines are being seen worldwide. The house price decline during 2008 has actually been more modest in the U.S. than in countries such as Denmark, New Zealand, the U.K., and Spain, though the price decline has been going on for [...]
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The coming collapse in business spending – made visible today
Smart managers react quickly and strongly to changed conditions. Unfortunately, when those conditions are a systemic event visible and affecting everyone their actions re-enforce the event. Positive feedback. This creates much of the business cycle’s volatility, the big swings. The “dampeners” of Keynesian economics, contra-cyclical monetary and fiscal policy, fight these in order to maintain [...]
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Goal: Increase Minority Homeowners by 5.5 Million in a Decade
Guess who’s goal this was? You might be surprised: “More and more people own their homes in America today. Two-thirds of all Americans own their homes, yet we have a problem here in America because few than half of the Hispanics and half the African Americans own the home. That’s a home ownership gap. It’s [...]
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Forecasting the results of this financial crisis – part I, about politics
As this economic earthquake continues shaking the world, we can only guess at the results. There will be a recession, probably a global one. But that too will pass. What effects from this will ripple into the future? This is speculation about the unknowable, to help us understand the magnitude of these events and open [...]
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Can Europe take care of its own financial crisis?
Europe’s new crisis plan will hopefully stop the panic. This column explores the remaining issues – the sharing the burden of transnational bank losses and restarting the inter-bank lending market. It suggests a technical change to the guarantees that would produce a better result.
