Stagflation Redux???
02-08-2009, 04:18 PM
#81
I feel the need...
Thread Starter
Why 'Stimulus' Will Mean Inflation
In a global downturn the Fed will have to print money to meet our obligations.
http://online.wsj.com/article/SB123388703203755361.html
As Congress blithely ushers its trillion dollar "stimulus" package toward law and the U.S. Treasury prepares to begin writing checks on this vast new appropriation, it might be wise to ask a simple question: Who's going to finance it?
That might seem like a no-brainer, which perhaps explains why no one has bothered to ask. Treasury securities are selling at high prices and finding buyers even though yields are low, hovering below 3% for 10-year notes. Congress is able to assure itself that it will finance the stimulus with cheap credit. But how long will credit be cheap? Will it still be when the Treasury is scrounging around in the international credit markets six months or a year from now? That seems highly unlikely.
Let's have a look at the credit market. Treasurys have been strong because the stock market collapse and the mortgage-backed securities fiasco sent the whole world running for safety. The best looking port in the storm, as usual, was U.S. Treasury paper. That is what gave the dollar and Treasury securities the lift they now enjoy.
But that surge was a one-time event and doesn't necessarily mean that a big new batch of Treasury securities will find an equally strong market. Most likely it won't as the global economy spirals downward.....
That might seem like a no-brainer, which perhaps explains why no one has bothered to ask. Treasury securities are selling at high prices and finding buyers even though yields are low, hovering below 3% for 10-year notes. Congress is able to assure itself that it will finance the stimulus with cheap credit. But how long will credit be cheap? Will it still be when the Treasury is scrounging around in the international credit markets six months or a year from now? That seems highly unlikely.
Let's have a look at the credit market. Treasurys have been strong because the stock market collapse and the mortgage-backed securities fiasco sent the whole world running for safety. The best looking port in the storm, as usual, was U.S. Treasury paper. That is what gave the dollar and Treasury securities the lift they now enjoy.
But that surge was a one-time event and doesn't necessarily mean that a big new batch of Treasury securities will find an equally strong market. Most likely it won't as the global economy spirals downward.....
03-08-2009, 04:25 PM
#82
I feel the need...
Thread Starter
Bass Says ‘Cluster’ of Sovereign Defaults Is Possible
Kyle Bass, the hedge-fund manager who made $500 million in 2007 betting on declines on subprime mortgages, said investors need to protect themselves against central banks printing money to cover up their mistakes.
Confidence in government and central bank leadership is plummeting globally, sending investors to buy “old fashioned stores of value” such as precious metals, Bass, managing partner of Dallas-based Hayman Advisors LP, said in a letter to clients. The growth in banking debt increases the possibility of a “cluster” of government defaults within three years, he wrote.
President Barack Obama is seeking Congressional approval for a $3.55 trillion budget for the fiscal year starting in October that would increase spending by 32 percent, resulting in a deficit of $1.17 trillion as he seeks to kick start the economy. Treasury Secretary Timothy Geithner said costs to rescue U.S. banks may be more than the $700 billion already approved after losses and writedowns globally from the credit crisis exceeded $1.19 trillion.
The “rampant printing of currencies” won’t immediately lead to inflation as banks reduce borrowing and asset values decline, Bass, 39, wrote in the March 2 letter, a copy of which was obtained by Bloomberg News. “The greater concern is the potential inflationary time bomb that grows as governments continue to borrow, print” and stimulate economies.
The U.S. will need to issue $2.35 trillion of new Treasuries this year, and Europe will have to issue even more government debt, Bass said.....
Confidence in government and central bank leadership is plummeting globally, sending investors to buy “old fashioned stores of value” such as precious metals, Bass, managing partner of Dallas-based Hayman Advisors LP, said in a letter to clients. The growth in banking debt increases the possibility of a “cluster” of government defaults within three years, he wrote.
President Barack Obama is seeking Congressional approval for a $3.55 trillion budget for the fiscal year starting in October that would increase spending by 32 percent, resulting in a deficit of $1.17 trillion as he seeks to kick start the economy. Treasury Secretary Timothy Geithner said costs to rescue U.S. banks may be more than the $700 billion already approved after losses and writedowns globally from the credit crisis exceeded $1.19 trillion.
The “rampant printing of currencies” won’t immediately lead to inflation as banks reduce borrowing and asset values decline, Bass, 39, wrote in the March 2 letter, a copy of which was obtained by Bloomberg News. “The greater concern is the potential inflationary time bomb that grows as governments continue to borrow, print” and stimulate economies.
The U.S. will need to issue $2.35 trillion of new Treasuries this year, and Europe will have to issue even more government debt, Bass said.....
03-09-2009, 04:43 PM
#83
Moderator Alumnus
The Federal Reserve is risking inflation after doubling the size of the U.S. monetary base and will face tough choices if prices start to rise before a recovery begins, according to a study by a regional Fed bank.
The U.S. central bank has massively boosted the monetary base, which includes currency in circulation and bank deposits held at the Fed, in an effort to support markets during the most severe financial crisis since the Great Depression.
"Inflation does not appear to be a risk in the current environment: the economy is in recession. Inflation is falling and is not expected to return before the recession ends," according to an essay in the March/April edition of Review magazine, published by the Federal Reserve Bank of St. Louis.
"If inflation resumes but the economy does not recover, policy-makers will face a difficult choice. Monitoring the size and composition of the monetary base will help us understand what actions are needed," the study said.
Emergency measures to flood credit markets with cash to stop them freezing in panic over bank losses doubled the size of the Fed's balance sheet and boosted the monetary base to around $1.7 trillion.
Fed officials agree they need an exit strategy to soak this money back up once the recession ends. They don't think it is an inflation risk right now because banks are still too scared to lend the extra money out in a way that would boost the broader money supply and lead to higher prices.
In the meantime, they must save the economy from an even more severe downturn, and argue that programs used to boost credit markets can be allowed to expire as the recession ends.
Critics warn it will be politically very hard to pull the plug on some of these support measures if financial markets remain under strain, possibly forcing the Fed to water down its commitment to keep prices low and stable while supporting the economy.
Billionaire investor Warren Buffett on Monday praised the efforts of the Fed to stimulate the economy but cautioned the measures could lead to an inflationary cycle worse than the one that followed the 1970s oil shock.
"We are certainly doing things that could lead to a lot of inflation," he said. "In economics there is no free lunch."
http://www.reuters.com/article/marke...47952420090309
The U.S. central bank has massively boosted the monetary base, which includes currency in circulation and bank deposits held at the Fed, in an effort to support markets during the most severe financial crisis since the Great Depression.
"Inflation does not appear to be a risk in the current environment: the economy is in recession. Inflation is falling and is not expected to return before the recession ends," according to an essay in the March/April edition of Review magazine, published by the Federal Reserve Bank of St. Louis.
"If inflation resumes but the economy does not recover, policy-makers will face a difficult choice. Monitoring the size and composition of the monetary base will help us understand what actions are needed," the study said.
Emergency measures to flood credit markets with cash to stop them freezing in panic over bank losses doubled the size of the Fed's balance sheet and boosted the monetary base to around $1.7 trillion.
Fed officials agree they need an exit strategy to soak this money back up once the recession ends. They don't think it is an inflation risk right now because banks are still too scared to lend the extra money out in a way that would boost the broader money supply and lead to higher prices.
In the meantime, they must save the economy from an even more severe downturn, and argue that programs used to boost credit markets can be allowed to expire as the recession ends.
Critics warn it will be politically very hard to pull the plug on some of these support measures if financial markets remain under strain, possibly forcing the Fed to water down its commitment to keep prices low and stable while supporting the economy.
Billionaire investor Warren Buffett on Monday praised the efforts of the Fed to stimulate the economy but cautioned the measures could lead to an inflationary cycle worse than the one that followed the 1970s oil shock.
"We are certainly doing things that could lead to a lot of inflation," he said. "In economics there is no free lunch."
http://www.reuters.com/article/marke...47952420090309
03-11-2009, 07:53 PM
#84
I feel the need...
Thread Starter
Pimco Predicts Inflation, Joining Buffett, Marc Faber
Pacific Investment Management Co. which runs the world’s biggest bond fund, joined investors Warren Buffett and Marc Faber in saying inflation will quicken, sounding a warning for Treasury investors.
U.S. government and Federal Reserve efforts to snap the recession will increase costs for goods and services as soon as 2010, Pimco said in a report today on its Web site by Chris Caltagirone and Bob Greer. Commodity producers are also delaying projects, which may limit supply and lead to higher prices when global growth resumes, according to Pimco.
“Inflation will rise,” Pimco said. Treasury securities that give investors protection against higher prices in the economy are “attractive now.”
Pimco is among a growing list of investors who are warning that programs to counter the U.S. slump will increase consumer prices as the economy starts to revive. Investor Jim Rogers, author of the books “Hot Commodities” and “Adventure Capitalist,” said this week U.S. policies will hurt conventional Treasuries, those that don’t offer inflation protection.....
U.S. government and Federal Reserve efforts to snap the recession will increase costs for goods and services as soon as 2010, Pimco said in a report today on its Web site by Chris Caltagirone and Bob Greer. Commodity producers are also delaying projects, which may limit supply and lead to higher prices when global growth resumes, according to Pimco.
“Inflation will rise,” Pimco said. Treasury securities that give investors protection against higher prices in the economy are “attractive now.”
Pimco is among a growing list of investors who are warning that programs to counter the U.S. slump will increase consumer prices as the economy starts to revive. Investor Jim Rogers, author of the books “Hot Commodities” and “Adventure Capitalist,” said this week U.S. policies will hurt conventional Treasuries, those that don’t offer inflation protection.....
03-12-2009, 12:34 PM
#85
Investor Jim Rogers, author of the books “Hot Commodities” and “Adventure Capitalist,” said this week U.S. policies will hurt conventional Treasuries, those that don’t offer inflation protection.....
03-24-2009, 07:08 PM
#86
I feel the need...
Thread Starter
Under-the-radar inflation
Those who are concerned about deflation should stop worrying. Inflation is the name of the game today.
http://www.marketwatch.com/news/stor...F99A0B5F886%7D
Let's begin with what's on the radar screen. Both the consumer and the producer price indexes have risen for two months in a row after a lengthy decline. The increases are fractional but they are increases, nevertheless.
Now let's take a peek at what is not showing up in the government's stats. You probably missed them too, since the increases to which I am referring tend to fly under the government's radar.
I am referring to shrinkage -- that time-honored way of raising prices without necessarily hoisting tags.....
Now let's take a peek at what is not showing up in the government's stats. You probably missed them too, since the increases to which I am referring tend to fly under the government's radar.
I am referring to shrinkage -- that time-honored way of raising prices without necessarily hoisting tags.....
03-30-2009, 06:39 PM
#87
I feel the need...
Thread Starter
Reflation and How to Exploit It
Some Bet Commodities Will Boom as Stimulus Restarts Global Economy
http://online.wsj.com/article/SB123836017211267069.html
The most talked-about investing strategy these days isn't stuffing money in a mattress, it's the reflation trade -- the bet that the world economy will rebound, driving up interest rates and commodities prices.
Even though the economy continues to struggle, investors are looking ahead to time when the massive rescue efforts by central banks and governments gain traction.
They are focused on raw materials and commodity-related stocks that would benefit from the surge in infrastructure spending. They are looking to exploit potential bottlenecks in production that could lift prices and corporate earnings. Some are layering on insurance against a spike in inflation should central banks lose control of their stimulus efforts.....
Even though the economy continues to struggle, investors are looking ahead to time when the massive rescue efforts by central banks and governments gain traction.
They are focused on raw materials and commodity-related stocks that would benefit from the surge in infrastructure spending. They are looking to exploit potential bottlenecks in production that could lift prices and corporate earnings. Some are layering on insurance against a spike in inflation should central banks lose control of their stimulus efforts.....
03-30-2009, 06:49 PM
#88
I feel the need...
Thread Starter
Bernanke Seeks to Avert Pressures on Fed After Crisis
At 4:30 p.m. on March 23, on a day dominated by release of the Obama administration’s plan to save the banking system and the fourth-best day in postwar Wall Street history, the U.S. Treasury and Federal Reserve released a one-page joint statement on the division of economic responsibilities between the two agencies.
Amid the flurry of news, the statement passed with little public attention; neither the New York Times nor Wall Street Journal printed articles about it the next day. The release said that while the Fed collaborates with other agencies to preserve financial stability, it alone is in charge of keeping consumer prices stable, its independence “critical.”
The statement was the culmination of a behind-the-scenes, two-month long debate involving the Fed’s Open Market Committee, as well as the Treasury. The discussions were driven by Chairman Ben S. Bernanke’s concern that work with the Bush and Obama administrations on repairing banks and markets not lead to attempts at political pressure later that would delay the start of measures to combat inflation.....
Amid the flurry of news, the statement passed with little public attention; neither the New York Times nor Wall Street Journal printed articles about it the next day. The release said that while the Fed collaborates with other agencies to preserve financial stability, it alone is in charge of keeping consumer prices stable, its independence “critical.”
The statement was the culmination of a behind-the-scenes, two-month long debate involving the Fed’s Open Market Committee, as well as the Treasury. The discussions were driven by Chairman Ben S. Bernanke’s concern that work with the Bush and Obama administrations on repairing banks and markets not lead to attempts at political pressure later that would delay the start of measures to combat inflation.....
04-01-2009, 06:47 PM
#89
I feel the need...
Thread Starter
Dollar Rally May End as Commodities Advance
By Kazumi Miura April 1 (Bloomberg)
Source: Bloomberg Professional
Gains in commodity prices suggest
demand for the dollar may be waning along with the search for a
refuge that drove investors to buy greenbacks, according to the
Daiwa Institute of Research in Tokyo.
The CHART OF THE DAY shows the Standard & Poor’s GSCI Index
of 24 commodities rose in the first quarter for the first time
since June, as gains stalled for the ICE’s Dollar Index, which
tracks the greenback’s performance against six other major
currencies. Gold jumped in the three months to March 31 by the
most in a year, on increased demand for the precious metal as a
hedge against inflation.
“Commodities might have started to price in concerns that
inflation will rise as the Federal Reserve pumps more money into
the system,” said Yuji Kameoka, senior economist and currency
analyst at the Daiwa Institute, part of Japan’s second-biggest
investment bank. With the Fed’s balance sheet set to more than
triple, “the dollar may begin its descent soon,” he said.
The U.S. central bank last month started buying $300
billion in Treasuries securities, pumping money into the system
to hold down borrowing costs. Those purchases, along with
President Barack Obama’s record budget deficit, may prompt a
recovery in the world’s largest economy and push up commodity
prices because of the enlarged supply of the U.S. currency,
Kameoka said.
The European Central Bank is unlikely to match the Fed’s
aggressiveness in printing money, so the greenback may weaken to
$1.45 per euro by year’s end, he said.
(To save a copy of the chart, click here.)
For Related News and Information:
Currency forecasts: FXFC <GO>
Stories on quantitative easing: STNI CBASSSETBUY <GO>
Top currency stories: TOP FX <GO>
--With reporting by Lee J. Miller in Bangkok, and translation
by Ritsuko Kameyama in Tokyo
demand for the dollar may be waning along with the search for a
refuge that drove investors to buy greenbacks, according to the
Daiwa Institute of Research in Tokyo.
The CHART OF THE DAY shows the Standard & Poor’s GSCI Index
of 24 commodities rose in the first quarter for the first time
since June, as gains stalled for the ICE’s Dollar Index, which
tracks the greenback’s performance against six other major
currencies. Gold jumped in the three months to March 31 by the
most in a year, on increased demand for the precious metal as a
hedge against inflation.
“Commodities might have started to price in concerns that
inflation will rise as the Federal Reserve pumps more money into
the system,” said Yuji Kameoka, senior economist and currency
analyst at the Daiwa Institute, part of Japan’s second-biggest
investment bank. With the Fed’s balance sheet set to more than
triple, “the dollar may begin its descent soon,” he said.
The U.S. central bank last month started buying $300
billion in Treasuries securities, pumping money into the system
to hold down borrowing costs. Those purchases, along with
President Barack Obama’s record budget deficit, may prompt a
recovery in the world’s largest economy and push up commodity
prices because of the enlarged supply of the U.S. currency,
Kameoka said.
The European Central Bank is unlikely to match the Fed’s
aggressiveness in printing money, so the greenback may weaken to
$1.45 per euro by year’s end, he said.
(To save a copy of the chart, click here.)
For Related News and Information:
Currency forecasts: FXFC <GO>
Stories on quantitative easing: STNI CBASSSETBUY <GO>
Top currency stories: TOP FX <GO>
--With reporting by Lee J. Miller in Bangkok, and translation
by Ritsuko Kameyama in Tokyo
04-08-2009, 07:49 PM
#90
I feel the need...
Thread Starter
Author who predicted crisis sees inflation ahead
An author who saw the global financial crisis coming fears the next bubble will come in the form of inflation and has little confidence U.S. President Barack Obama's team is up to the challenge ahead.
"The Democrats have replaced the Republicans as the big benefactors to the financial community," said Kevin Phillips, author of "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism."
"The financial community is donating more to Democrats than ever before and you've got more Democrats in the financial community, creating a very powerful pattern there. I don't think you're going to see the Obama administration and Congress willing to be tough enough in dealing with these things," he told Reuters......
"The Democrats have replaced the Republicans as the big benefactors to the financial community," said Kevin Phillips, author of "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism."
"The financial community is donating more to Democrats than ever before and you've got more Democrats in the financial community, creating a very powerful pattern there. I don't think you're going to see the Obama administration and Congress willing to be tough enough in dealing with these things," he told Reuters......
04-13-2009, 06:51 PM
#91
I feel the need...
Thread Starter
Fed’s Flood May Leave Democracy Needing Bailout
.....This means that the Fed is printing cash at a rate that, while not threatening historic records set in Weimar Germany, promises to create substantial inflationary pressures once the economy revives.
Therein lies the problem. At some point, when the economy begins to pick up again, the Fed will have to withdraw some of those reserves from the system before they ignite an inflation bonfire.
Traditionally, the Fed might withdraw reserves by selling some of the Treasuries it owns. But the scale of the money creation is so grand this time that the Fed might not be able to sell enough Treasuries to meaningfully affect inflation without running up against the debt limit that Congress sets when it gives Treasury the authority to borrow money.
The Fed could, in principle, sell some of the assets it has been buying -- but if these assets were liquid, the Fed wouldn’t have been buying them in the first place. Which means it may be extremely difficult to get the cash out of the economy before it is too late......
Therein lies the problem. At some point, when the economy begins to pick up again, the Fed will have to withdraw some of those reserves from the system before they ignite an inflation bonfire.
Traditionally, the Fed might withdraw reserves by selling some of the Treasuries it owns. But the scale of the money creation is so grand this time that the Fed might not be able to sell enough Treasuries to meaningfully affect inflation without running up against the debt limit that Congress sets when it gives Treasury the authority to borrow money.
The Fed could, in principle, sell some of the assets it has been buying -- but if these assets were liquid, the Fed wouldn’t have been buying them in the first place. Which means it may be extremely difficult to get the cash out of the economy before it is too late......
05-04-2009, 04:26 PM
#92
I feel the need...
Thread Starter
‘Great Recession’ Will Redefine Full Employment as Jobs Vanish
Post-recession America may be saddled with high unemployment even after good times finally return.
Hundreds of thousands of jobs have vanished forever in industries such as auto manufacturing and financial services. Millions of people who were fired or laid off will find it harder to get hired again and for years may have to accept lower earnings than they enjoyed before the slump.
This restructuring -- in what former Federal Reserve Chairman Paul Volcker calls “the Great Recession” -- is causing some economists to reconsider what might be the “natural” rate of unemployment: a level that neither accelerates nor decelerates inflation. This state of equilibrium is often described as “full” employment.
Fallout from the recession implies a “markedly higher” natural rate of unemployment, says Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. “It was 5.5 percent; maybe it will be 6.5 percent, maybe 7 percent.”
That has implications for policy makers as well as workers. The Obama administration and the Federal Reserve are counting on the jobless rate to fall to a medium-term equilibrium of about 5 percent as the economy recovers. A natural rate significantly above that would drive up the annual budget deficit -- which will top $1 trillion for the first time this year -- by reducing tax revenue and pushing up spending on unemployment benefits.
A higher rate would also require the Fed to make a choice: Accept an economy with more Americans permanently out of work, or try to boost employment at the risk of heating up inflation.....
Hundreds of thousands of jobs have vanished forever in industries such as auto manufacturing and financial services. Millions of people who were fired or laid off will find it harder to get hired again and for years may have to accept lower earnings than they enjoyed before the slump.
This restructuring -- in what former Federal Reserve Chairman Paul Volcker calls “the Great Recession” -- is causing some economists to reconsider what might be the “natural” rate of unemployment: a level that neither accelerates nor decelerates inflation. This state of equilibrium is often described as “full” employment.
Fallout from the recession implies a “markedly higher” natural rate of unemployment, says Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. “It was 5.5 percent; maybe it will be 6.5 percent, maybe 7 percent.”
That has implications for policy makers as well as workers. The Obama administration and the Federal Reserve are counting on the jobless rate to fall to a medium-term equilibrium of about 5 percent as the economy recovers. A natural rate significantly above that would drive up the annual budget deficit -- which will top $1 trillion for the first time this year -- by reducing tax revenue and pushing up spending on unemployment benefits.
A higher rate would also require the Fed to make a choice: Accept an economy with more Americans permanently out of work, or try to boost employment at the risk of heating up inflation.....
05-05-2009, 04:33 PM
#93
I feel the need...
Thread Starter
One-way street
Like Wall Street traffic, interest rates must now go in one direction
http://www.marketwatch.com/news/stor...FDE839512D1%7D
The sign that you see on every corner down on Wall Street no longer applies just to motor vehicles -- it is now pointing to the direction that long-term interest rates must take as well.
One way or another, long rates are heading higher. Yields on the 10-year Treasury note, for example, have already shot up to a five-month high of 3.17%, and this is only the beginning.
There are two very simple reasons for this. The first is supply, and the second is inflation.
On the supply side, it is no secret that the government's budget deficit is exploding. In the first half of this fiscal year alone, the federal deficit totaled nearly $957 billion. This is not only a record in dollar terms -- it also represents the largest budget gap in terms of its share of the gross domestic product since World War II.
When Washington runs a deficit, it must borrow to make up the difference between income and outlays. Its primary source is the domestic credit market.
In the first quarter alone, the government sold nearly half a trillion dollars of debt. It plans to raise another $361 billion in the current quarter and a whopping $515 billion in the third.....
One way or another, long rates are heading higher. Yields on the 10-year Treasury note, for example, have already shot up to a five-month high of 3.17%, and this is only the beginning.
There are two very simple reasons for this. The first is supply, and the second is inflation.
On the supply side, it is no secret that the government's budget deficit is exploding. In the first half of this fiscal year alone, the federal deficit totaled nearly $957 billion. This is not only a record in dollar terms -- it also represents the largest budget gap in terms of its share of the gross domestic product since World War II.
When Washington runs a deficit, it must borrow to make up the difference between income and outlays. Its primary source is the domestic credit market.
In the first quarter alone, the government sold nearly half a trillion dollars of debt. It plans to raise another $361 billion in the current quarter and a whopping $515 billion in the third.....
05-13-2009, 06:27 PM
#94
I feel the need...
Thread Starter
Taylor Says Fed May Not Have Much Time Before Rate Rise Needed
The Federal Reserve may soon need to raise interest rates, said a former Treasury official who devised a formula for rate-setting based on the outlook for inflation and growth.
“My calculation implies we may not have as much time before the Fed has to remove excess reserves and raise the rate,” John Taylor, a Treasury undersecretary under President George W. Bush from 2001 to 2005, said today at an Atlanta Fed conference in Jekyll Island, Georgia.
Taylor, a Stanford University professor, said the Fed’s growing balance sheet is a “systemic risk. He said his rule suggests a fed funds rate of 0.5 percent, while the central bank has cut rates to between zero percent and 0.25 percent.
Fed Chairman Ben S. Bernanke said yesterday at the conference the Fed was prepared to withdraw monetary stimulus “in a timely way” to prevent inflation from becoming a threat when the economy recovers. Employers cut 539,000 jobs in April, the fewest in six months, the Labor Department said amid indications that the worst of the U.S. recession has passed. The Fed’s Open Market Committee voted unanimously last month to keep unchanged its targets for purchases of housing debt and long- term Treasuries.....
“My calculation implies we may not have as much time before the Fed has to remove excess reserves and raise the rate,” John Taylor, a Treasury undersecretary under President George W. Bush from 2001 to 2005, said today at an Atlanta Fed conference in Jekyll Island, Georgia.
Taylor, a Stanford University professor, said the Fed’s growing balance sheet is a “systemic risk. He said his rule suggests a fed funds rate of 0.5 percent, while the central bank has cut rates to between zero percent and 0.25 percent.
Fed Chairman Ben S. Bernanke said yesterday at the conference the Fed was prepared to withdraw monetary stimulus “in a timely way” to prevent inflation from becoming a threat when the economy recovers. Employers cut 539,000 jobs in April, the fewest in six months, the Labor Department said amid indications that the worst of the U.S. recession has passed. The Fed’s Open Market Committee voted unanimously last month to keep unchanged its targets for purchases of housing debt and long- term Treasuries.....
05-20-2009, 07:32 PM
#95
I feel the need...
Thread Starter
Pimco’s El-Erian Sees More Regulation, Slower Growth
Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said the “new normal” includes heightened government regulation, slower growth and a shrinking global role for the U.S. economy.
“We are looking at a world in which the fist of government is going to be very strong relative to the invisible hand of markets,” El-Erian said in a Bloomberg Radio interview from Pimco’s headquarters in Newport Beach, California.
A greater role for government in private markets and a smaller banking system will lead to economic growth rates of 2 percent or less in the U.S. over the next five years, El-Erian said. The age of consumers’ “entitlement” to purchase more than they make in income is over, he said.
El-Erian is the author of “When Markets Collide: Investment Strategies for the Age of the Global Economy,” published last year to explain the shifting relationship between international markets and to lay out an investment approach that minimizes risk from systemic shocks.
“The role of finance in the global economy and in the U.S. will be much more muted,” El-Erian said in the Bloomberg Radio interview. “Fewer activities will find financing, and as a result this will contribute to lower growth.”
Banks stopped lending last fall in the face of the worst financial crisis in generations. Central banks slashed interest rates and pumped cash into the financial system to jump-start lending, spurring concern their efforts may stoke inflation. El- Erian said inflation will pick up in about a year.....
“We are looking at a world in which the fist of government is going to be very strong relative to the invisible hand of markets,” El-Erian said in a Bloomberg Radio interview from Pimco’s headquarters in Newport Beach, California.
A greater role for government in private markets and a smaller banking system will lead to economic growth rates of 2 percent or less in the U.S. over the next five years, El-Erian said. The age of consumers’ “entitlement” to purchase more than they make in income is over, he said.
El-Erian is the author of “When Markets Collide: Investment Strategies for the Age of the Global Economy,” published last year to explain the shifting relationship between international markets and to lay out an investment approach that minimizes risk from systemic shocks.
“The role of finance in the global economy and in the U.S. will be much more muted,” El-Erian said in the Bloomberg Radio interview. “Fewer activities will find financing, and as a result this will contribute to lower growth.”
Banks stopped lending last fall in the face of the worst financial crisis in generations. Central banks slashed interest rates and pumped cash into the financial system to jump-start lending, spurring concern their efforts may stoke inflation. El- Erian said inflation will pick up in about a year.....
05-26-2009, 06:35 PM
#96
I feel the need...
Thread Starter
Buy Commodities, Pay Off Debt as Inflation Looms
The fallout that has irradiated highly leveraged Western economies has started a King Kong versus Godzilla battle.
To avoid getting trampled, you will need to finesse your credit options and hedge against inflation.
The monster characterization comes courtesy of Niall Ferguson. Viewed through a lens of history, the Harvard professor and author of “The Ascent of Money” (Penguin, $29.95), sees deflation in the short term followed by inflation.
King Kong, in Ferguson’s parlance, represents the kind of deflation going on now. Economies from Japan to the U.K., in his estimation, will continue to shrink this year. The lone exceptions are China, India and Brazil. Godzilla is the wave of liquidity “pouring like a jet hose from central banks.”
Viewing the contracting countries as being mired in “slight depressions” for the time being, Ferguson says it’s only a matter of time before large government-bond investors start demanding higher yields -- rates that “could put the brakes on economic recovery.”
I would go two steps further and say that so much government debt raining down on Western economies will not only trigger inflation, it signals the end of an epoch of excessive affluence. The age of McMansions with big-screen televisions in every room and two sport-utility vehicles in the driveway is over.....
To avoid getting trampled, you will need to finesse your credit options and hedge against inflation.
The monster characterization comes courtesy of Niall Ferguson. Viewed through a lens of history, the Harvard professor and author of “The Ascent of Money” (Penguin, $29.95), sees deflation in the short term followed by inflation.
King Kong, in Ferguson’s parlance, represents the kind of deflation going on now. Economies from Japan to the U.K., in his estimation, will continue to shrink this year. The lone exceptions are China, India and Brazil. Godzilla is the wave of liquidity “pouring like a jet hose from central banks.”
Viewing the contracting countries as being mired in “slight depressions” for the time being, Ferguson says it’s only a matter of time before large government-bond investors start demanding higher yields -- rates that “could put the brakes on economic recovery.”
I would go two steps further and say that so much government debt raining down on Western economies will not only trigger inflation, it signals the end of an epoch of excessive affluence. The age of McMansions with big-screen televisions in every room and two sport-utility vehicles in the driveway is over.....
05-26-2009, 06:48 PM
#97
I feel the need...
Thread Starter
Inflation cloud looms large over bonds
“Investors with a long memory have this horrible fear of the inflation dragon, and no matter how many times you cut its head off it reappears.”
http://www.ft.com/cms/s/0/9eabc5e8-4...44feabdc0.html
05-28-2009, 06:02 PM
#98
Moderator Alumnus
The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.
Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
http://bloomberg.com/apps/news?pid=2...Bps&refer=home
05-28-2009, 07:25 PM
#99
I feel the need...
Thread Starter
Exploding debt threatens America
Standard and Poor’s decision to downgrade its outlook for British sovereign debt from “stable” to “negative” should be a wake-up call for the US Congress and administration. Let us hope they wake up.
Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.....
Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.....
Obamanomics FTL.
06-04-2009, 05:25 AM
#100
I feel the need...
Thread Starter
Rising Interest on Nations’ Debts May Sap World Growth
As governments worldwide try to spend their way out of recession, many countries are finding themselves in the same situation as embattled consumers: paying higher interest rates on their rapidly expanding debt.
Increased rates could translate into hundreds of billions of dollars more in government spending for countries like the United States, Britain and Germany.
Even a single percentage point increase could cost the Treasury an additional $50 billion annually over a few years — and, eventually, an additional $170 billion annually.
This could put unprecedented pressure on other government spending, including social programs and military spending, while also sapping economic growth by forcing up rates on debt held by companies, homeowners and consumers.....
Increased rates could translate into hundreds of billions of dollars more in government spending for countries like the United States, Britain and Germany.
Even a single percentage point increase could cost the Treasury an additional $50 billion annually over a few years — and, eventually, an additional $170 billion annually.
This could put unprecedented pressure on other government spending, including social programs and military spending, while also sapping economic growth by forcing up rates on debt held by companies, homeowners and consumers.....
06-04-2009, 05:52 PM
#101
I feel the need...
Thread Starter
Bond Market Gags on Relentless Economic Hurrah
Rip van Bondtrader peered through sleep-caked eyes at the Bloomberg terminal at his bedside, his neurons firing drowsily as the ping of an alarm combined with a flashing box to pierce his quiescence. “Ten-Year Treasury Yield Breaches 3.7 Percent,” the flickering message said.
Rip yawned, tapping the “NOW” function onto his computer keyboard to work out how long his slumbers had lasted. “That can’t be right,” he muttered, squinting at the screen dateline that said the market alert was disturbing his dreams less than six months after he had snuggled down for what he had hoped would be a multiyear snooze.
When Rip pulled the duvet over his head at the end of 2008, the global economy had been destroyed by an avaricious banking system seemingly bent on self-destruction. Recession was threatening to morph into depression, central bankers were running out of interest-rate ammunition, politicians were flip- flopping like beached fish, and the 10-year note had been hovering around the 2 percent mark. A long period of bond-market stasis seemed guaranteed, the perfect chance for some shuteye.
So what the heck had happened to give bonds such a fright?
Rip yawned, tapping the “NOW” function onto his computer keyboard to work out how long his slumbers had lasted. “That can’t be right,” he muttered, squinting at the screen dateline that said the market alert was disturbing his dreams less than six months after he had snuggled down for what he had hoped would be a multiyear snooze.
When Rip pulled the duvet over his head at the end of 2008, the global economy had been destroyed by an avaricious banking system seemingly bent on self-destruction. Recession was threatening to morph into depression, central bankers were running out of interest-rate ammunition, politicians were flip- flopping like beached fish, and the 10-year note had been hovering around the 2 percent mark. A long period of bond-market stasis seemed guaranteed, the perfect chance for some shuteye.
So what the heck had happened to give bonds such a fright?
06-08-2009, 07:24 PM
#102
I feel the need...
Thread Starter
‘Stagflation Scenario’ Stalks U.S. as Commodity Prices Jump
As if General Motors Corp. didn’t have enough to worry about, a 60 percent jump in gasoline prices this year may cause inflation to soar as it did in 2008 and throw another roadblock in the way of recovery.
It’s “one thing that we have to keep our eye on,” said Mike DiGiovanni, executive director of global market and industry analysis for the automaker, which filed for bankruptcy last week.
It isn’t only GM’s sales that might suffer. Higher energy costs helped trigger a 20 percent rise in a Standard & Poor’s index of 24 commodities during May, the biggest monthly percentage gain since September 1990. The increases threaten a burst of inflation that could sap demand just as the U.S. economy is starting to right itself after the biggest contraction in five decades.
“You could end up with something like a stagflation scenario,” said David Hensley, director of global economic coordination for JPMorgan Chase & Co. in New York. “There’s a risk the economic recovery might be stifled.....”
It’s “one thing that we have to keep our eye on,” said Mike DiGiovanni, executive director of global market and industry analysis for the automaker, which filed for bankruptcy last week.
It isn’t only GM’s sales that might suffer. Higher energy costs helped trigger a 20 percent rise in a Standard & Poor’s index of 24 commodities during May, the biggest monthly percentage gain since September 1990. The increases threaten a burst of inflation that could sap demand just as the U.S. economy is starting to right itself after the biggest contraction in five decades.
“You could end up with something like a stagflation scenario,” said David Hensley, director of global economic coordination for JPMorgan Chase & Co. in New York. “There’s a risk the economic recovery might be stifled.....”
06-10-2009, 05:55 PM
#103
I feel the need...
Thread Starter
The markets are the message
The economy may still be in recession, but as far as the markets are concerned, inflation is just around the corner.
http://www.marketwatch.com/story/the...age-2009690100
Late last week, the markets came down with a case of inflation fears. It might have stemmed from an upbeat interpretation of the latest labor-force data, as well as other recent figures, or from speeches given by a couple of Federal Reserve officials.
Whatever the case, the markets have begun to look over the valley of recession to the peak beyond. And as I first warned at the end of last year, what they see is a new round of inflation, made possible by a Fed whose presses are churning out money as fast as they can. ( See my column of Dec. 23, 2008.).
Commodities prices rose a record 20% in May and are still climbing, with gold and silver leading the way. The price of oil has doubled in just four months, while the Baltic Dry Index has shot up six-fold since December.
There is no doubt that the Fed has injected loads of liquidity into the system. Bank reserves now total $1 trillion compared to only $11 billion last year. Once the banks start lending, the money supply, already rising rapidly, will grow even faster.
Not surprisingly, interest rates have shot up. Yields on the 10-year Treasury note are just under 4% -- the most they've been in eight months and double levels of just five months ago.....
Whatever the case, the markets have begun to look over the valley of recession to the peak beyond. And as I first warned at the end of last year, what they see is a new round of inflation, made possible by a Fed whose presses are churning out money as fast as they can. ( See my column of Dec. 23, 2008.).
Commodities prices rose a record 20% in May and are still climbing, with gold and silver leading the way. The price of oil has doubled in just four months, while the Baltic Dry Index has shot up six-fold since December.
There is no doubt that the Fed has injected loads of liquidity into the system. Bank reserves now total $1 trillion compared to only $11 billion last year. Once the banks start lending, the money supply, already rising rapidly, will grow even faster.
Not surprisingly, interest rates have shot up. Yields on the 10-year Treasury note are just under 4% -- the most they've been in eight months and double levels of just five months ago.....
06-13-2009, 08:35 PM
#104
Safety Car
fibonacci - you are whoring this thread. zero responses. this is way too broad, i dont know where to begin...i am trying to start a discussion in T-Notes, see my last thread.
If you dont mind me asking, what do you do?
If you dont mind me asking, what do you do?
Last edited by ThermonMermon; 06-13-2009 at 08:38 PM.
06-18-2009, 06:32 PM
#105
I feel the need...
Thread Starter
Fuss Won’t Touch U.S. Debt for Loomis Fund as Deficit Mounts
Daniel Fuss, the Loomis Sayles bond fund manager who has matched Bill Gross’s returns for the past decade, isn’t tempted by U.S. Treasuries even after yields on the 10-year note have climbed more than 64 percent this year.
“The U.S. government keeps making bonds available to us at increasing rates of interest,” Fuss, 75, said in an interview in his Boston office. “Their funding requirements are horrific.”
Yields on the 10-year note rose to 3.63 percent from 2.21 percent at the beginning of the year as the government borrows to finance a deficit that may quadruple to more than $1.85 trillion by Sept. 30, according to the nonpartisan Congressional Budget Office. Investors are demanding higher yields to offset the effect of a possible increase in the inflation rate and a falling dollar on the value of the debt.....
“The U.S. government keeps making bonds available to us at increasing rates of interest,” Fuss, 75, said in an interview in his Boston office. “Their funding requirements are horrific.”
Yields on the 10-year note rose to 3.63 percent from 2.21 percent at the beginning of the year as the government borrows to finance a deficit that may quadruple to more than $1.85 trillion by Sept. 30, according to the nonpartisan Congressional Budget Office. Investors are demanding higher yields to offset the effect of a possible increase in the inflation rate and a falling dollar on the value of the debt.....
06-23-2009, 06:41 PM
#106
I feel the need...
Thread Starter
Bernanke Must Reassure Market About Rate Strategy
Chairman Ben S. Bernanke has to convince investors the Federal Reserve can take back more than $1 trillion it pumped into the U.S. banking system to pull the economy out of the longest decline in more than six decades.
Bernanke and his colleagues, who meet June 23 and 24 to map monetary strategy, have said they need to continue buying assets and keep interest rates low for a long time to help revive growth. Rising Treasury bond yields show Wall Street is concerned their policy may lead to an inflationary bubble: Ten- year notes reached an eight-month high of 3.95 percent June 10.
“The markets don’t understand the Fed’s exit strategy; they’re confused,” said Lyle Gramley, a senior economic adviser with New York-based Soleil Securities Corp. and former central- bank governor. “That’s contributed to the rise in long-term rates.”
The risk is that higher rates will hold back the budding economic recovery by lifting borrowing costs for homeowners and buyers.....
Bernanke and his colleagues, who meet June 23 and 24 to map monetary strategy, have said they need to continue buying assets and keep interest rates low for a long time to help revive growth. Rising Treasury bond yields show Wall Street is concerned their policy may lead to an inflationary bubble: Ten- year notes reached an eight-month high of 3.95 percent June 10.
“The markets don’t understand the Fed’s exit strategy; they’re confused,” said Lyle Gramley, a senior economic adviser with New York-based Soleil Securities Corp. and former central- bank governor. “That’s contributed to the rise in long-term rates.”
The risk is that higher rates will hold back the budding economic recovery by lifting borrowing costs for homeowners and buyers.....
08-03-2009, 08:50 PM
#107
I feel the need...
Thread Starter
Obama's stimulus killers
The president's two big legislative goals for the fall could put new burdens on a weak economy.
http://money.cnn.com/2009/07/28/news...mulus.fortune/
NEW YORK (Fortune) -- Barack Obama promised universal health care and a mass conversion to green energy when he launched his presidential campaign. On that frigid February day in 2007, the economy was growing at a 2.8% clip. Obama stuck to the same promises a year later when he won Iowa, as the housing market was slumping into recession. And energy and health care were the twin pillars of his acceptance speech in Denver, 18 days before Lehman Brothers collapsed.
As one of the most disciplined, on-message politicians of our time, President Obama hasn't wavered from his audacious plans to remake entire business sectors. But when wavering is what the U.S. economy seems to do best these days, the President confronts a new question: Does his own agenda threaten to choke off the economic recovery that he also promises -- and that will define much of his legacy? Both of his legislative campaigns for the fall, health-care reform and the cap-and-trade plan to curb carbon emissions, could put new burdens on a weak economy. Even supporters of the initiatives fear a GDP hit. "It's a big gamble," says Mark Zandi of Moody's Economy.com, a proponent of health-care reform, about that initiative's impact on growth.....
As one of the most disciplined, on-message politicians of our time, President Obama hasn't wavered from his audacious plans to remake entire business sectors. But when wavering is what the U.S. economy seems to do best these days, the President confronts a new question: Does his own agenda threaten to choke off the economic recovery that he also promises -- and that will define much of his legacy? Both of his legislative campaigns for the fall, health-care reform and the cap-and-trade plan to curb carbon emissions, could put new burdens on a weak economy. Even supporters of the initiatives fear a GDP hit. "It's a big gamble," says Mark Zandi of Moody's Economy.com, a proponent of health-care reform, about that initiative's impact on growth.....
08-03-2009, 10:06 PM
#108
The sizzle in the Steak
KILL cap n tax and KILL Healthcare rat-hole.
As if the free money from the sky and massive debt wasn't enough....
As if the free money from the sky and massive debt wasn't enough....
09-24-2009, 07:10 PM
#109
I feel the need...
Thread Starter
US May Face 'Armageddon' If China, Japan Don't Buy Debt
The US is too dependent on Japan and China buying up the country's debt and could face severe economic problems if that stops, Tiger Management founder and chairman Julian Robertson told CNBC.
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."
Robertson said inflation is a big risk if foreign countries were to stop buying bonds.....
"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."
Robertson said inflation is a big risk if foreign countries were to stop buying bonds.....
10-05-2009, 07:33 PM
#110
I feel the need...
Thread Starter
Investors in Treasuries, Dollars Defy Common Sense
The U.S. should lose its golden credit rating. Bankers and investors around the world should dump dollars. Read any economics textbook and you come to that conclusion.
Massive government spending and money creation to rescue the nation from the Great Recession have deluged the U.S. Treasury market with new securities -- exacerbating the country’s already massive debt load.
Chronic U.S. trade deficits have led to the accumulation of vast stores of dollars in foreign bank accounts.
Classic economics theory says supply should overwhelm demand in both markets. Treasuries should no longer be considered free of risk. The dollar should no longer be the key global currency.....
Massive government spending and money creation to rescue the nation from the Great Recession have deluged the U.S. Treasury market with new securities -- exacerbating the country’s already massive debt load.
Chronic U.S. trade deficits have led to the accumulation of vast stores of dollars in foreign bank accounts.
Classic economics theory says supply should overwhelm demand in both markets. Treasuries should no longer be considered free of risk. The dollar should no longer be the key global currency.....
10-06-2009, 04:21 PM
#111
I feel the need...
Thread Starter
Bass Buys Mortgages, Metals on Hyperinflation Fear
Kyle Bass, the hedge-fund manager who made $500 million in 2007 betting against subprime securities, is buying shorter-term debt and precious metals, anticipating hyperinflation will lead to higher interest rates.
Funds advised by Hayman Advisors LP bought mortgage bonds equal to about 50 percent of assets, Bass wrote in a letter to investors Oct. 2. The Dallas-based investment firm added corporate debt, primarily high-yield loans and bonds, equal to approximately 25 percent of assets.
Bass, whose main fund has lost more than 17 percent this year after missing a recovery in equity and credit markets, is buying securities with so-called short duration as he predicts central bank and government actions globally to rescue the financial system will result in “outright currency debasement,” he wrote. The U.S. alone has lent, spent or guaranteed $11.6 trillion to pull the economy out of the worst financial crisis since the Great Depression.
Federal Reserve Chairman Ben S. Bernanke “and crew have done a masterful job of pulling out all the stops (and then some) to save the U.S. and world banking system from collapse,” Bass wrote. “Based on our thesis of impending inflation and competition for sovereign capital as world governments run huge fiscal deficits (and sell debt to finance them), we are investing cautiously in credit.....”
Funds advised by Hayman Advisors LP bought mortgage bonds equal to about 50 percent of assets, Bass wrote in a letter to investors Oct. 2. The Dallas-based investment firm added corporate debt, primarily high-yield loans and bonds, equal to approximately 25 percent of assets.
Bass, whose main fund has lost more than 17 percent this year after missing a recovery in equity and credit markets, is buying securities with so-called short duration as he predicts central bank and government actions globally to rescue the financial system will result in “outright currency debasement,” he wrote. The U.S. alone has lent, spent or guaranteed $11.6 trillion to pull the economy out of the worst financial crisis since the Great Depression.
Federal Reserve Chairman Ben S. Bernanke “and crew have done a masterful job of pulling out all the stops (and then some) to save the U.S. and world banking system from collapse,” Bass wrote. “Based on our thesis of impending inflation and competition for sovereign capital as world governments run huge fiscal deficits (and sell debt to finance them), we are investing cautiously in credit.....”
10-18-2009, 09:29 AM
#112
I feel the need...
Thread Starter
What Happens If the Dollar Crashes
Trade wars could break out. Overexposed banks might collapse. And that's just for starters
http://www.businessweek.com/magazine...2000801269.htm
https://acurazine.com/forums/showpos...8&postcount=66
The financial crisis taught us that markets can drop further and faster than anyone expects. Housing prices, for example, fell for three straight years starting in 2006, even though the conventional wisdom right up until the bust began was that prices would not fall even a little bit.
Let's apply some of our hard-won knowledge to the dollar, which is also supposed to be resistant to a bust. After weakening gradually since 2002, the greenback rose during the financial crisis last year. It has fallen roughly 15% since March as investors moved to higher-yielding currencies. The conventional wisdom is that at these levels the dollar is cheap and, if anything, due for a rebound. "Currencies don't go much more than 20% from their long-term averages in real [inflation-adjusted] terms. We're there already," says Michael Dooley, an economist who is co-founder and research chief of Cabezon Capital Management, a San Francisco investment firm.
But it's worth at least thinking about the possibility of a dollar bust. The reason the housing bust had such devastating consequences was a failure of imagination: Lenders, regulators, credit raters, and others simply couldn't believe that house prices would ever fall the way they did, so they were blindsided.....
Let's apply some of our hard-won knowledge to the dollar, which is also supposed to be resistant to a bust. After weakening gradually since 2002, the greenback rose during the financial crisis last year. It has fallen roughly 15% since March as investors moved to higher-yielding currencies. The conventional wisdom is that at these levels the dollar is cheap and, if anything, due for a rebound. "Currencies don't go much more than 20% from their long-term averages in real [inflation-adjusted] terms. We're there already," says Michael Dooley, an economist who is co-founder and research chief of Cabezon Capital Management, a San Francisco investment firm.
But it's worth at least thinking about the possibility of a dollar bust. The reason the housing bust had such devastating consequences was a failure of imagination: Lenders, regulators, credit raters, and others simply couldn't believe that house prices would ever fall the way they did, so they were blindsided.....
https://acurazine.com/forums/showpos...8&postcount=66
12-10-2009, 06:23 PM
#113
I feel the need...
Thread Starter
Treasury Yield Curve Steepest Since at Least 1980 After Auction
Treasuries fell, with the gap in yields between 2- and 30-year securities reaching the widest margin since at least 1980, after a $13 billion offering of 30- year bonds drew lower-than-forecast demand.
The so-called yield curve touched 373 basis points, the most in at least 29 years, as the bonds drew a yield of 4.52 percent, compared with an average forecast of 4.483 percent in a Bloomberg News survey of five of the Federal Reserve’s 18 primary dealers. The so-called yield curve has widened from 191 basis points at the end of 2008, with the Fed anchoring its target rate at a record-low range of zero to 0.25 percent and the Treasury extending the average maturity of U.S. debt.
“This was a mediocre auction where the yield needed to be tweaked a little on the high side to get it done,” said William Larkin, a fixed-income portfolio manager in Salem, Massachusetts at Cabot Money Management, which manages $500 million. “It’s an indication of what’s to come in 2010. We expect a gradual uptick to higher yields.....”
The so-called yield curve touched 373 basis points, the most in at least 29 years, as the bonds drew a yield of 4.52 percent, compared with an average forecast of 4.483 percent in a Bloomberg News survey of five of the Federal Reserve’s 18 primary dealers. The so-called yield curve has widened from 191 basis points at the end of 2008, with the Fed anchoring its target rate at a record-low range of zero to 0.25 percent and the Treasury extending the average maturity of U.S. debt.
“This was a mediocre auction where the yield needed to be tweaked a little on the high side to get it done,” said William Larkin, a fixed-income portfolio manager in Salem, Massachusetts at Cabot Money Management, which manages $500 million. “It’s an indication of what’s to come in 2010. We expect a gradual uptick to higher yields.....”
12-11-2009, 11:23 AM
#114
Карты убийцы
Be kind. It part of his body of work on this forum... crickets chirping...
12-12-2009, 07:28 AM
#116
I feel the need...
Thread Starter
Volcker Says ‘Basic Structure’ of Economy to Impede U.S. Growth
Former Federal Reserve Chairman Paul Volcker said imbalances in the structure of the U.S. economy pose a bigger challenge than the financial crisis and will impede economic growth for some time.
“We have another economic problem which is mixed up in this of too much consumption, too much spending relative to our capacity to invest and to export,” Volcker, an adviser to President Barack Obama, said today in Berlin. “It’s involved with the financial crisis but in a way it’s more difficult than the financial crisis because it reflects the basic structure of the economy.”
The Fed, European Central Bank and Bank of England have provided record liquidity to support a recovery from the worst financial crisis since the 1930s and have signaled there is no rush to raise interest rates. Fed Chairman Ben S. Bernanke said this week the U.S. economy faces “formidable headwinds,” while the ECB last week left interest rates at a record low.
“It’s likely that economic growth is going to be pretty sluggish for a while,” Volcker said in a Bloomberg Television interview.
The Obama administration has endorsed a plan by the Group of 20 to rebalance the world economy so that it’s less reliant on U.S. demand.....
“We have another economic problem which is mixed up in this of too much consumption, too much spending relative to our capacity to invest and to export,” Volcker, an adviser to President Barack Obama, said today in Berlin. “It’s involved with the financial crisis but in a way it’s more difficult than the financial crisis because it reflects the basic structure of the economy.”
The Fed, European Central Bank and Bank of England have provided record liquidity to support a recovery from the worst financial crisis since the 1930s and have signaled there is no rush to raise interest rates. Fed Chairman Ben S. Bernanke said this week the U.S. economy faces “formidable headwinds,” while the ECB last week left interest rates at a record low.
“It’s likely that economic growth is going to be pretty sluggish for a while,” Volcker said in a Bloomberg Television interview.
The Obama administration has endorsed a plan by the Group of 20 to rebalance the world economy so that it’s less reliant on U.S. demand.....
We've got US Stagnation down pat, as the 'sugar high' (El-Erian) of Gov't largesse wears out, the broader global reflation picks up steam...
Get your Obamanomics Stagflation trade on!
12-28-2009, 05:46 AM
#117
I feel the need...
Thread Starter
$4.8 trillion - Interest on U.S. debt
Here's a new way to think about the U.S. government's epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest.
More than half. In fact, $4.8 trillion.
If that's hard to grasp, here's another way to look at why that's a problem.
In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.....
More than half. In fact, $4.8 trillion.
If that's hard to grasp, here's another way to look at why that's a problem.
In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.....
01-20-2010, 07:15 PM
#118
I feel the need...
Thread Starter
Fed Should Read Its Own Memo on Rising-Rate Risk
Bank regulators, in an effort to buff up their tarnished image and appear proactive, took it upon themselves to alert their charges to looming interest-rate risk.
“In the current environment of historically low short-term interest rates, it is important for institutions to have robust processes for measuring and, where necessary, mitigating their exposure to potential increases in interest rates,” sayeth the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Federal Reserve and other regulators in a Jan. 8 Interagency Advisory Bulletin.
It’s no surprise interest rates are going up. They can’t go any lower. The Fed’s benchmark rate has been close to zero for more than a year.....
“In the current environment of historically low short-term interest rates, it is important for institutions to have robust processes for measuring and, where necessary, mitigating their exposure to potential increases in interest rates,” sayeth the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Federal Reserve and other regulators in a Jan. 8 Interagency Advisory Bulletin.
It’s no surprise interest rates are going up. They can’t go any lower. The Fed’s benchmark rate has been close to zero for more than a year.....
02-17-2010, 06:44 PM
#119
I feel the need...
Thread Starter
Higher Inflation Is a Lousy Cure for Meltdowns
Policy makers are looking for measures to avert the next financial crisis. Most of the proposed solutions involve enhanced regulation. Economists at the International Monetary Fund have a better idea: higher inflation.
Yes, that’s right. After a multidecade effort to become credible and anchor inflation expectations, central banks are now supposed to throw it all away in order to have more room to maneuver in financial crises.
Start with the inflation target, or ceiling, most central banks have adopted of 2 percent, multiply by five, add six, divide by four, and bingo! That’s the new, improved inflation target of 4 percent, according to IMF economists Olivier Blanchard, Giovanni Dell’Ariccia and Paolo Mauro, authors of a new paper, “Rethinking Macroeconomic Policy.”
Explicit inflation targeting has always been controversial for central banks with a dual mandate. The Federal Reserve, for example, is required to deliver stable prices and maximum sustainable employment. Some Fed officials eschew an explicit inflation target, preferring to retain the flexibility to respond to economic crises with lower interest rates even if inflation is above a target.....
Yes, that’s right. After a multidecade effort to become credible and anchor inflation expectations, central banks are now supposed to throw it all away in order to have more room to maneuver in financial crises.
Start with the inflation target, or ceiling, most central banks have adopted of 2 percent, multiply by five, add six, divide by four, and bingo! That’s the new, improved inflation target of 4 percent, according to IMF economists Olivier Blanchard, Giovanni Dell’Ariccia and Paolo Mauro, authors of a new paper, “Rethinking Macroeconomic Policy.”
Explicit inflation targeting has always been controversial for central banks with a dual mandate. The Federal Reserve, for example, is required to deliver stable prices and maximum sustainable employment. Some Fed officials eschew an explicit inflation target, preferring to retain the flexibility to respond to economic crises with lower interest rates even if inflation is above a target.....
02-19-2010, 01:14 PM
#120
Moderator Alumnus
Consumer prices excluding food and energy fell in January — the first time they have in any month since 1982.
The benign report Friday on consumer inflation sent a positive signal to investors. It suggested the Fed will be able to keep short-term interest rates at record lows to strengthen the economic recovery without triggering inflation.
Some have worried that a Fed rate increase affecting consumers and businesses might be imminent, especially after it just raised the rate banks pay for emergency loans.
But the news of low inflation eased some concerns and helped lift stock prices. In midday trading, the Dow Jones industrial average rose about 29 points, or 0.3 percent. Broader stock averages also gained. Bond prices were little changed, but the dollar rose against other major currencies.
Overall consumer prices edged up 0.2 percent in January, the Labor Department said. But excluding volatile food and energy, prices fell 0.1 percent. That drop, the first monthly decline since December 1982, reflected falling prices for housing, new cars and airline fares.
http://www.msnbc.msn.com/id/35476050...s_and_economy/
The benign report Friday on consumer inflation sent a positive signal to investors. It suggested the Fed will be able to keep short-term interest rates at record lows to strengthen the economic recovery without triggering inflation.
Some have worried that a Fed rate increase affecting consumers and businesses might be imminent, especially after it just raised the rate banks pay for emergency loans.
But the news of low inflation eased some concerns and helped lift stock prices. In midday trading, the Dow Jones industrial average rose about 29 points, or 0.3 percent. Broader stock averages also gained. Bond prices were little changed, but the dollar rose against other major currencies.
Overall consumer prices edged up 0.2 percent in January, the Labor Department said. But excluding volatile food and energy, prices fell 0.1 percent. That drop, the first monthly decline since December 1982, reflected falling prices for housing, new cars and airline fares.
http://www.msnbc.msn.com/id/35476050...s_and_economy/