.@gfunksupreme @ryanlizza I concur. Obama administration didn't want to jail Rosen, just tap him. But pol appts who knew should be bounced
11 minutes ago
Finance & Markets Channel: Latest Posts
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Finance & Markets
Treasury Program to Buy Troubled Assets (oops to Invest in Troubled Companies)
The Treasury, in what the Wall Street Journal called an “unusual announcement,” today proclaimed that it was able to use the $700 billion allocated last week to invest “directly in troubled companies” to “strengthen the balance sheet of individual institutions.” The Journal continued, “Such a move, however, is likely only to occur if a firm [...]
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Finance & Markets
The Credit Crunch May Cause Another Great Depression
Back in June 2008 I wrote a piece for VOXEU predicting a mild recession in 2009. Over the last few weeks the situation has become far worse, and I believe even these pessimistic predictions were too optimistic. I now believe Europe and the US will sink into a severe recession next year, with GDP contracting [...]
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Finance & Markets
A Failure To Learn From The Past
After perhaps the most tumultuous week in the financial markets in living memory, the question on everyone’s mind is whether this turn of events was inevitable. In order to answer this question fairly, one has to avoid making the common mistake of using 20-20 hindsight based on the facts that have come to light in [...]
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Finance & Markets
Fed Watch: Only the Timing is in Doubt
Only the Timing is in Doubt, by Tim Duy: Yesterday I opined on the Fed’s hesitation to cut rates when such a call should be a slam dunk. Why not step forward with the intermeeting cut? Could possibly the Fed have given up hope on rate cuts, and instead intend to focus on other policy [...]
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Finance & Markets
Emergency Global Rate Cuts: 50 bps
Coordinated rate cuts around the world, 50 basis from the Federal Reserve, European Central Bank and four other central banks. The banks lowered interest rates in an unprecedented, emergency coordinated bid to “ease the economic effects of the financial crisis.” The Fed cut its benchmark rate by a half point to 1.5%, as the ECB [...]
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Europe
No European Ownership of the Fortis Problem
The nationalisation of the Dutch Fortis assets has led to euphoric reporting in some Dutch newspapers, as if Holland beat Belgium in soccer. Minister of Finance Bos is lauded for negotiating a bargain price and president Wellink of the Dutch central bank (DNB) for his foresight and his unfaltering protection of ABN-AMRO. In truth [...]
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Finance & Markets
The Meltdown (Part I)
Global capital markets have seized up. Confidence is evaporating. Put simply, no lender trusts any borrower to repay, fearing that that borrower won’t be able to rely on anyone else to honor obligations. Even banks are hoarding cash, unwilling to lend to other banks. Everyone with any savings is heading for the hills — for [...]
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Finance & Markets
How Bad Will the Downturn Be? Stylized Facts
The IMF released several chapters of the World Economic Outlook; one chapter entitled Financial Stress and Economic Downturns provides some insights into the ramifications of the current financial turmoil. click to download figure Figure 4.7 from WEO (Oct. 2008). Notes: Sources: Haver Analytics; OECD, Analytic Database; OECD, Economic Outlook (2008); and IMF staff calculations. The [...]
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Finance & Markets
A Response to Lawrence Summers
Larry Summers is certainly right in asserting that the impact of Hank Paulson’s US$700 billion plan on the US fiscal position need not be very large and it will depend very much on how it is deployed and how the economy performs. He is also right in arguing that, in the present difficult economic circumstances, [...]
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Europe
Can the IMF Save the World?
As the financial crisis has unfolded, the International Monetary Fund has been noticeable mainly for its absence. This will now change at least temporarily as its Governors assemble for their annual meeting and the kleg lights are turned on. The question is whether those Governors and the management to whom they entrust the Fund’s operation [...]
