Posts Tagged ‘ public policy ’

Does it matter who controls the businesses of the country?  Does it matter who regulates the businesses of the economy?  Should these people be smart or dumb? One cost of the meddling that the Fed and Treasury have done through the bailouts is that dumb people are left in place.  People who mismanaged their...
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In my last post on this topic, I went over the orthodox and unorthodox monetary policy responses to the crisis in the US.  Here were the orthodox options: Lower the Fed funds rate into lower positive territory. Offer language that says that the Fed Funds rate will be low for a long time. Buy...
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11) I was surprised to read that there is not a perfect market in interest rate swaps.  They are so vanilla, but counterparty risk interferes. 12) There is always a skunk at the party, and who better than Baruch to dis bonds?  I half agree with him.  Half, because the momentum can’t be ignored...
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1) Start with the big one from yesterday.  On of my favorite monetary heretics, Raghuram Rajan, whose excellent book I reviewed, Fault Lines, pointed out how he had gotten it right prior to the crisis, versus many at the Fed who blew it badly.  Rajan suggests that Fed Funds should be at 2-2.25%, which...
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Illiquidity is an underrated risk.  Most financial company failures are due to illiquidity, which usually takes the form of too many illiquid assets and liquid liabilities.  Adding to the difficulty is that it is generally difficult to price illiquid assets, because they don’t trade often. So where do we see failures due to illiquidity?...
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People are good about making binary comparisons for the most part, leaving aside come of the more complex choices highlighted in the book, “Priceless.”  Would you like coffee or tea?  Do you prefer this room painted blue or white? Where things get complex is when there are a zillion choices, and your quest is...
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1) I am not a Treasury bond bull, per se, but I am reluctant to short until I see real price weakness.  And some think that I am only a fundamentalist value investor.  With bonds, it is tough to catch the turning points, and tough to grasp the motivations of competitors.  Better to miss...
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Here are my thoughts on the markets, in no particular order: 1) Momentum draws investors.  Long treasuries have run hard, and people like them now.  My view is, if you want to short them, wait until they rise 0.1% more in yield, then short.  There are a lot of weak longs to shake out....
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The last few days, I’ve been reading various opinions on the US Economy on the web, and thinking that they don’t really get the situation that we are in, both short- and long-term.  I am increasingly disappointed with those proposing Keynesian remedies, because those were what got us into this pickle in the first...
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June 2010 August 2010 Comments Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually. Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed...
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