Archive for the ‘Monetary Policy’ Category
Let Fannie, Freddie Fail: Jim Rogers
Monday, September 1st, 2008
Fannie Mae and Freddie Mac should not be saved if they go bankrupt, and economic stimulus packages do more harm to economies in the long run than good in the short term, Jim Rogers, CEO of Rogers Holdings, told CNBC Friday, August 29, 2008 at 3:15AM from Singapore.
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Tags: Derivatives, Fannie Mae, Financials, Freddie Mac, Jim Rogers, Mortgage
Posted in Banks, Credit Markets, Economy, Financials, Geo-political, Gold, Markets, Monetary Policy, Strategy, US Stocks, wisdom | No Comments »
PIMCO Co-CEO: When Markets Collide
Sunday, August 31st, 2008
About a month ago, Charlie Rose interviewed PIMCO’s Mohamed El Erian. El Erian is one of the country’s most successful money managers. He’s the co-CEO of the Pacific Investment Management Company, better known as PIMCO which oversees more than 829 billion dollars. He previously led Harvard University’s endowment to substantial returns on investment. In the interview, which is available below, Charlie Rose speaks to him about his new book “When Markets Collide” and how he sees the global economy today.
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Tags: Credit Market, Derivatives, El-Erian, PIMCO
Posted in Banks, China, Credit Markets, Economy, Emerging Markets, Financials, Fixed Income, Gold, India, Investment Strategy, Markets, Monetary Policy | No Comments »
Faber: Global Economy in Recession
Saturday, August 9th, 2008
Investor Marc Faber, publisher of the Gloom, Boom & Doom Report, talks with Bloomberg’s Kathleen Hays about the euro’s performance against the U.S. dollar, the commodities market and the global economy. The euro fell the most in almost eight years against the dollar as traders pared bets the European Central Bank will raise interest rates as the economy slows.
click for video
00:00 Euro versus dollar; “global recession”
01:54 U.S. economy, ECB rates; commodities market
04:14 Investment strategy: dollar, Japan
Running time 05:18
Source:
Faber Says Global Economy in Recession; `Long’ on Dollar: Video
Bloomberg, August 8, 2008 15:27 EDT
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUSFhyJW5QGU
Courtesy: Barry Ritholtz, The Big Picture
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Tags: Commodities, Dollar, Economy, Euro, Faber, GloomBoomDoom, Recession
Posted in Economy, Emerging Markets, Euro, Financials, International Markets, Monetary Policy | No Comments »
Video: Nouriel Roubini (3 Parts)
Friday, July 25th, 2008
Nouriel Roubini, NYU Stern School of Business, opines about the market, the credit crisis, and the housing market in this 3 part interview:
Bear Market Only Half Over, But It’s Not Armageddon
More Than $1 Trillion Needed to Solve Housing Crisis
‘They’re All Toast’: Roubini Says Brokers, Even Goldman, Can’t Stay Independent
Sources:
Video Interview on Tech Ticker: Roubini: “Bear Market Only Half Over, But It’s Not Armageddon”
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Tags: Banks, Brokers, Economics, Financials, Housing Market, Nouriel Roubini, RGE Monitor
Posted in Credit Markets, Financials, Gold, Markets, Monetary Policy | No Comments »
Chart: US M3 Money Supply Growth
Wednesday, May 7th, 2008
May 7, 2008 - Courtesy: Nick Barisheff, The Bullion Buzz Newsletter, Bullion Management Group Inc.
US M3 Money Supply Growth
M3, which is no longer published by the US Federal Reserve, is the broadest measure of money supply. It includes M2, as well as certain accounts held by banks and thrift institutions (including balances in money market mutual funds held by institutional investors). Since March 2006, M3b, a reconstructed version of M3, has grown by nearly $4 trillion, from approximately $10.5 trillion to about $14.2 trillion. To put this in perspective, total M3 in 1971, when the US cut the dollar’s link to gold, was less than $800 billion. The current annualized rate of increase is now about 20%. Since the classical definition of inflation is an increase in money supply that leads to an increase in goods and services, the price increases we are now experiencing are destined to accelerate. Given these inflation realities, portfolios need to be rebalanced to ensure that purchasing power is preserved. As precious metals are proven hedges for inflation, portfolio holdings should be rebalanced to ensure adequate allocations are held.
http://www.nowandfutures.com/key_stats.html
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Tags: Currency, Economy, inflation, M3, M3 Money Supply Growth, precious metals
Posted in Banks, Credit Markets, Economy, Financials, Fixed Income, Gold, Markets, Monetary Policy, inflation | No Comments »
Hard numbers: The economy is worse than you know
Wednesday, April 30th, 2008
April 30, 2008 - Kevin Phillips, author of Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism, published a recent article in Harper’s Magazine, about the way in which economic statistics have been massaged over many years by many White House administrations, one after the other, in order the mask the true nature of the US economy over the years. Here are some excerpts from this excellent article:
Ever since the 1960s, Washington has gulled its citizens and creditors by debasing official statistics, the vital instruments with which the vigor and muscle of the American economy are measured. The effect has been to create a false sense of economic achievement and rectitude, allowing us to maintain artificially low interest rates, massive government borrowing, and a dangerous reliance on mortgage and financial debt even as real economic growth has been slower than claimed.
The story starts after the inauguration of John F. Kennedy in 1961, when high jobless numbers marred the image of Camelot-on-the-Potomac and the new administration appointed a committee to weigh changes. The result, implemented a few years later, was that out-of-work Americans who had stopped looking for jobs — even if this was because none could be found — were labeled “discouraged workers” and excluded from the ranks of the unemployed, where many, if not most, of them had been previously classified. By the 1969 fiscal year, Lyndon Johnson orchestrated a “unified budget” that combined Social Security with the rest of the federal outlays. This innovation allowed the surplus receipts in the former to mask the emerging deficit in the latter.
Richard Nixon, besides continuing the unified budget, developed his own taste for statistical improvement. He asked his second Federal Reserve chairman, Arthur Burns, to develop what became an ultimately famous division between “core” inflation and headline inflation. If the Consumer Price Index was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of “volatility,” categories that happened to be troublesome: at that time, food and energy.
Core inflation could be spotlighted when the headline number was embarrassing, as it was in 1973 and 1974. (The economic commentator Barry Ritholtz has joked that core inflation is better called “inflation ex-inflation” — i.e., inflation after the inflation has been excluded.)
In 1983, under the Reagan administration, inflation was further finagled when the Bureau of Labor Statistics (BLS) decided that housing, too, was overstating the Consumer Price Index; the BLS substituted an entirely different “Owner Equivalent Rent” measurement, based on what a homeowner might get for renting his or her house. This methodology, controversial at the time but still in place today, simply sidestepped what was happening in the real world of homeowner costs.
In addition to Phillips’ assertions here, The US Government stopped publishing money supply statistics, specifically M3, so that we would no longer be able to track the amount printed money that gets added to the country’s money supply every year since. Hmmm…?
Read this complete article here: Hard Numbers: The Economy is Worse Than You Know, Harpers Magazine, courtesy of TampaBay.com, April 25, 2008.
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Tags: Bad Money, Bad Money: Reckless Finance, Barry Ritholtz, Economy, Failed Politics and the Global Crisis of American Capit, inflation, Kevin Phillips, Markets, The Big Picture
Posted in CPI, Economy, Financials, Geo-political, Gold, Markets, Monetary Policy, Politics, Strategy, inflation | 1 Comment »
A Look at Alan Greenspan’s Long Lost Thesis
Wednesday, April 30th, 2008
April 28, 2008 - Barron’s magazine has gotten their hands on Alan Greenspan’s Ph. D. thesis and provides analysis. The bottom line is that Greenspan long underestimated the potential effects of a popped housing bubble. Here are some excerpts:
There are only two known copies: the Maestro’s own and the one we viewed. As far as we can tell, Barron’s is the only news organization ever to have seen the thesis since a third and now missing copy was removed from the public shelves of NYU’s Bobst library at Greenspan’s request in 1987, the year that Ronald Reagan appointed him chairman of the Federal Reserve Board. Glancing at the document, we momentarily felt like Indiana Jones at the dramatic moment in which he discovers the Lost Ark of the Covenant.
We were tickled to find that the work’s introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble. Writes Greenspan: “There is no perpetual motion machine which generates an ever-rising path for the prices of homes.”
Greenspan, however, didn’t foresee a housing mania spilling into the general economy, toppling banks and brokerage houses and paralyzing key portions of the credit system. The worst he could anticipate was that a sharp “break in prices of existing homes would pull down the prices of new homes to the of construction costs or below, inducing a sharp contraction in building.” Back then, there were no home-equity lines of credit, derivatives or subprime mortgages. Mortgages were largely concentrated at savings and loans. Credit was harder to come by, too, because conventional mortgage rates were about 8.5% and headed significantly higher. Still, the thesis shows that the former Fed boss was focused on housing very early in his career. Thus, it casts doubt on his recent assertions about being surprised by the Mesozoic-era-size impact of this decade’s housing mania.
For the complete article click here: Looking At Greenspan’s Long Lost Thesis, Barron’s, April 28, 2008.
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Tags: Alan Greenspan, Economy, Fed, inflation, Markets, Monetary Policy, Ph. D., Thesis
Posted in Credit Markets, Economy, Financials, Fixed Income, Gold, Markets, Monetary Policy, Politics, Satire, Strategy, inflation | No Comments »
Inflation Abounds
Tuesday, April 29th, 2008
April 29, 2008 - Courtesy Barry Ritholtz, The Big Picture - The Federal Reserve is now in day 1 of their two day meeting. The statement we get tomorrow, and the minutes we will read next month are likely to be intriguing.
Why? The longstanding official myth that inflation is modest, and contained is starting to be recognized for the fraud that it is.
Examples abound: The Times of London: Food-price inflation has already pushed up a typical family’s weekly shopping bill by 15 per cent in a year (Era of cheap food ends as prices surge). Yet here in the US, the BLS has food prices up only 4.5% year over year (that’s with the dollar down ~2% vs. the pound)
The price of rice has increased dramatically in recent weeks due to crop failure overseas and resulting hoarding… Rice has doubled in price in six months. (Bay Area Shoppers Asked To Limit Rice Purchases
During the first week of April…leisure fares from traditional carriers on 280 major routes rose 13
percent from the previous year…We’ve got an industry that’s in trouble,” said Vaughn Cordle, chief
executive and chief analyst at AirlineForecasts in Washington. “If oil prices stay anywhere near $100,
$120 for the year … we’ll have a massive restructuring of the airline industry.” (Summer travel headaches loom as airlines’ woes deepen).
All these obvious price increases are begining to undermine confidence int he Federal Reserve. We see article like this one in the San Diego Union-Tribune:The Fed’s inflation gauge isn’t realistic, critics say and this one in Harpers: “Numbers Racket: Why the Economy is Worse than We know.”
Sources:Era of cheap food ends as prices surge
Steve Hawkes, Greg Hurst and Valerie Elliott, Times Online, April 23, 2008
http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article3799327.ece
Moms’ new battle: The food price bulge, Parija B. Kavilanz,
CNNMoney.com, April 21, 2008: 10:33 AM EDT http://money.cnn.com/2008/04/21/news/economy/moms_foodshopping/index.htm
The Fed’s inflation gauge isn’t realistic, critics say Dean Calbreath, San Diego UNION-TRIBUNE, April 17, 2008, http://www.signonsandiego.com/news/business/20080417-9999-1n17inflate.html
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Tags: Barry Ritholtz, Fed, Federal Reserve, inflation, inflation abounds, Markets
Posted in Credit Markets, Economy, Markets, Monetary Policy, inflation | No Comments »
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