Politics in the Eurozone has turned into a strange and tragic farce in the recent weeks and months. While the peripheral countries continue to judge successful economic policy on the amount of tax liabilities they can levy to smother their depressed economies, the big dogs play various games in which they try to hide their … Read more
Ryan Avent directs us to David Beckwork and the following excerpt from Federal Reserve Governor Janet Yellen’s recent speech: Importantly, resource utilization rates have been so low since late 2008 that a variety of simple rules have been calling for a federal funds rate substantially below zero, which of course is not possible. Consequently, the … Read more
Thomas Malthus (1766-1834) is best known for his theory of population growth in which he postulates that population growth will be limited by food production, and that because the two grow at different rates, one is beholden to the other and will be limited by it. He writes: “Population, when unchecked, increases in a geometrical … Read more
The Federal Reserve has a legitimacy problem. Fortunately, a potential policy shift is available that offers both the right thing for the Fed to do and a way to please sensible people on both sides of the political spectrum: raise capital requirements for megabanks. As the election season progresses, Republican politicians are increasingly criticizing the monetary policy … Read more
Europe’s banks are raising their capital-asset ratios to meet regulatory requirements. Many fear that this will trigger a contractionary shrinking of assets. This column presents new evidence that much of the ratio increases since 2009 have come fro new capital rather than reducing exposure to the real economy. Investor trust in European banks has dwindled, … Read more
Each time the Fed undertakes a new program of quantitative easing, questions arise about the possible impact on its solvency. I addressed that concern in November 2010, at the time QE2 was announced. Here is an updated version of that post that looks at the solvency issue in the context of QE3. The Fed’s new … Read more
By now you’ve all watched Mitt Romney’s performance in the cozy gathering of fellow fat cat conservatives. Most people have focused on his candid statements about his views on the bottom half of the American population: he simply can’t be bothered with those deadbeats. I’m not going into that now here, as I’m writing on … Read more
The European Commission’s plan to establish a single supervisory mechanism (SSM) for all banks in the euro area has received a mixed reception. The ambitions regarding the coverage (all banks) and time path (first phase starting in January 2013) have met with strong German resistance. Quick initiatives to complement the SSM with a joint deposit … Read more
For the past two years, as regular readers know, I have been bearish on hard commodities. Prices may have dropped substantially from their peaks during this time, but I don’t think the bear market is over. I think we still have a very long way to go. There are four reasons why I expect prices to … Read more
It’s difficult to puzzle out what Bernanke thinks he is accomplishing with QE3. The level of bond buying, as various commentators have pointed out, is much lower than in the earlier QE programs. And pulling out bigger guns in the past was not terribly productive. As we wrote in April 2011 in a post titled … Read more