Mr. Dimon suggested to Ms. Bartiromo on Thursday that JPMorgan is doing its part to keep capital flowing: He said his bank had loaned out $150 billion in the last 90 days, in the form of credit card debt, mortgages, auto loans and loans to corporations, among others.
via Dimon Says Loans Are Flowing – DealBook Blog – NYTimes.com.
Financial crisis pushes consumption/investment down– here’s the impact
“There ain’t going to be a new global financial architecture,” said Charles Goodhart, a professor at the London School of Economics and a former top official at the Bank of England. “What has been shown up by this crisis is that the only people who can take up action are the nation states. I think the crisis has set back globalism and world federalism by a long way.”
via Time for a Global Regulatory ‘Sheriff’? – DealBook Blog – NYTimes.com.
“There ain’t going to be a new global financial architecture,” said Charles Goodhart, a professor at the London School of Economics and a former top official at the Bank of England. “What has been shown up by this crisis is that the only people who can take up action are the nation states. I think the crisis has set back globalism and world federalism by a long way.”
via Time for a Global Regulatory ‘Sheriff’? – DealBook Blog – NYTimes.com.
Given the true cost of getting its money out of the hedge funds and other illiquid investments, my knowledgeable source finds the claim by Harvard’s money managers that the fund lost only 22 percent at best “purely Pollyannaish.” (A Harvard University press representative declined to comment for this story.) But while Harvard’s money managers may chose to look through rose-colored glasses at the value of their portfolio, Harvard University, which relies on the interest from distribution from its endowment to fund one-third of its operating budget, needs to be more realistic. As its president, Drew Faust, noted in an e-mail to the Harvard community, “We need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.”
oney supply become a poor predictor for economic growth, but it has developed an inverse relationship. The reason is that M2 accounts now represent a safe harbor, so in times of strife investors turn to them since at least the principal is protected, while in good times there are other places to put your money in anticipation of spending.
“The negative correlation between M2 and economic activity is here to stay,” Bandholz said. “Therefore, the Conference Board should finally exclude real money supply from the list of leading indicators — or at lest allow for a negative correlation between M2 and economic growth.”
via Real Time Economics : Money Supply Reverses Course as an Indicator.
At some point monetary policy becomes fiscal policy too, as a quick look at the Fed’s balance sheet will indicate. So it’s fiscal policy based on Treasury borrowing vs. fiscal policy based on Bernanke and money creaton. In a time of deflationary pressures, and a bad fiscal future, usually I would prefer Fed-led fiscal policy. I do recognize that we are placing more weight on the Fed than it can bear, but of course at this point there are no good options.
via Marginal Revolution: Unorthodox monetary policy vs. fiscal policy.
Mr. Lacker, in his most recent speech, broke into a fairly clear discussion to distinguish between monetary policy and credit programs, signaling where he would fall today. Monetary policy means keeping prices stable, he said, while credit policy — also aimed at growth — “is more a form of fiscal policy in that it uses the public sector’s balance sheet to alter the allocation of resources.”
“Mixing monetary and fiscal policy is fraught with risks,” he said. “Many historical instances of monetary instability have been the result of central banks being prevailed upon to use their balance sheets for fiscal ends in ways that impeded their ability to keep inflation under control. . While at the present time, credit programs do not conflict with our monetary policy strategy, there could well come a time at which monetary stimulus needs to be withdrawn to prevent a resurgence of inflation, even though credit markets are not deemed fully healed.”
via Real Time Economics : The Lone Dissenter: Lacker Wants to Buy Treasurys.
To work properly, the incentives of all parties should be aligned as closely as possible, Breakingviews says. Bank rescues must distinguish between banks that are troubled but can be saved, and those that should be allowed to die. As little as possible of the industry should be taken into public ownership, it says. And taxpayers must be properly protected, so that the bad bank process does minimal damage to their economic interests.
Breakingviews believes that there is a way to meet these objectives: allow banks to sell any assets they want, and have the government’s bad bank acquire them on a consignment basis with no initial cash outlay. Banks would achieve a return on their consigned assets only as the bad bank sold them or allowed them to mature, it says. This “consignment shop” structure removes the initial valuation challenge that bedeviled the original concept of the Treasury’s Troubled Asset Relief Program, according to the publication.
via How to Improve the Bank Rescue – DealBook Blog – NYTimes.com.
Everything You Wanted to Know about Credit Default Swaps–but Were Never Told
via RGE – Everything You Wanted to Know about Credit Default Swaps–but Were Never Told.
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