One thing that may have gone unnoticed today but 3mo LIBOR ticked up for the first time in a few days, which is a bit odd if the liquidity concerns have been taken off the board.
The 131bn taken down today, while less than anticipated, is a bit misleading. Banks still have access to an unlimited 6-day tender tomorrow for same-day settlement, allowing them to roll into the weekly MRO. Ultimately it will come down to the July 6th stress tests to determine any additional capital needs.
By Scott Hamilton June 29 (Bloomberg) -- Bank of England Markets Director Paul Fisher said that the central banks mandate is clear on what to do if inflation pressures in the economy persist in the medium term. While we need to be sensitive to the risk of tightening policy prematurely, Fisher said, should it appear likely that inflationary pressure is sustained at a higher level into the medium term, then it is clear what our mandate would require us to do. Fisher made the comments in a speech on June 14 in Liverpool, England. The remarks were released today by the bank.
I don't dispute what you are saying but what my point is that sometimes, regardless of fiscal and monetary policy, it will take time to emerge from a recession. It may take 5 years, it may take 10 years, and that is what the case is when there is a balance sheet recession in place. Poor policy will prolong that recovery or turn it into a Depression. Effective fiscal and monetary policy - policy that prevents further balance sheet destruction while creating an environment where balance sheet repair and restoration are allowed to occur - still may require a good deal of time. What most critics of policy don't seem to accept is that even with effective policy, a recovery may require a decade to emerge from the collapse of years and decades of excess. That is why when immediate results are not seen, governments move towards fiscal consolidation, and monetary policy tightening, the same flaws of impatience and desire for immediate gratification that fuels assets bubbles.
When we don't see explosive GDP growth resulting from policy, well, we're not supposed to. Frankly, just keeping GDP flat via policy is a triumph.
Economists and market pundits are missing the point when they criticize the effectiveness of fiscal and monetary policy in a balance sheet recession (as academia, the IMF, OECD, Fed, etc, misguidedly criticized Japan's policies) for not fostering more GDP growth. The Keynesian role of governments during these recessions is not to borrow and spend in order to GROW, rather to borrow and spend to BRIDGE the gap, restore the money supply, and buy individuals and corporations enough time and to provide a conducive environment in which they are allowed to restore their balance sheets using the free cash flow they are able to still generate during this time. Not much different that backstopping a bank to prevent bank runs as all financial institutions are technically insolvent at any one point in time should all depositors demand their loans back in a simultaneous fashion.
One area I disagree with Koo on is the effectiveness of monetary policy. Koo seems to think it is almost entirely ineffective, but I see it as preventing further balance sheet destruction by propping up the asset values, the asset side of the balance sheet so that less repair and restoration is needed, presumably leading to a faster recovery. If your home value falls from $500,000 to $250,000 but would have fallent o $175,000 if not for Fed programs (MBS, treasury purchases, low rate environment), that is $75,000 less of deleveraging/recapitalization that individuals and financial institutions will need to endure.
The Keynesian role of governments during these recessions is not to borrow and spend in order to GROW, rather to borrow and spend to BRIDGE the gap, restore the money supply, and buy individuals and corporations enough time and to provide a conducive environment in which they are allowed to restore their balance sheets using the free cash flow they are able to still generate during this time. Not much different that backstopping a bank to prevent bank runs as all financial institutions are technically insolvent at any one point in time should all depositors demand their loans back in a simultaneous fashion.
One area I disagree with Koo on is the effectiveness of monetary policy. Koo seems to think it is almost entirely ineffective, but I see it as preventing further balance sheet destruction by propping up the asset values, the asset side of the balance sheet so that less repair and restoration is needed, presumably leading to a faster recovery. If your home value falls from $500,000 to $250,000 but would have fallent o $175,000 if not for Fed programs (MBS, treasury purchases, low rate environment), that is $75,000 less of deleveraging/recapitalization that individuals and financial institutions will need to endure.
Try publishing this in the UK weekend papers: Traders bet BankofEngland will raise rates to 6.25% --highest since 1… https://t.co/GWXrTEAk4R(11 months ago)
Poor start to a slow market day as Ezone PMIs disappoint. Im still keeping an eye on the rare (-2%) USD-GOLD combo,… https://t.co/UyRzWsRbs7(11 months ago)
-5% YTD is not good, while -7% from the year highs can be tough. Gold traders have their eyes fixated on this for n… https://t.co/NV5UMKsfNo(11 months ago)
ما وراء هبوط الدولار مع الذهب و من منهما يتمكن الارتداد؟
موعدنا الآن في غرفة شركة إكس أم لجلسة الأسواق
https://t.co/Y7tD0RxCS2
@XM_COM (11 months ago)
Jobless claims > 300k before next FOMC meeting would be ideal for Fed to make up for any CPI upside surprise (11 months ago)
"Cook & Eat at Home" scheme may come next to defeat UK inflation... (11 months ago)
Earlier in the week gold selloff was attributed to smaller than exp China EASING. Metal is now holding v well despi… https://t.co/ZW9cmXTPWW(11 months ago)
إستعمال تحليل الإنترماركت والتحليل الفني الكلاسيكي لتداول الذهب و الناسداك و السندات. شاهد هنا
Using intermarket technicals analysis to trade XAUUSD Nasdaq100 and Bonds.Watch here.
Latest Hot-Chart - May 16
Dax 200 DMA Deviation
You remember we went short Dax40 in late March based on the 13% 200 DMA extension, which gave us at least a 500-pt gain.
View Hot-Chart..
We are living through The Great Experiment
By Scott Hamilton
June 29 (Bloomberg) -- Bank of England Markets Director Paul Fisher said that the central banks mandate is clear on what to do if inflation pressures in the economy persist in the medium term.
While we need to be sensitive to the risk of tightening policy prematurely, Fisher said, should it appear likely that inflationary pressure is sustained at a higher level into the medium term, then it is clear what our mandate would require us to do. Fisher made the comments in a speech on June 14 in Liverpool, England. The remarks were released today by the bank.
I will not make any comments on Facebook to those I converse with on that format other than a "game well played".
When we don't see explosive GDP growth resulting from policy, well, we're not supposed to. Frankly, just keeping GDP flat via policy is a triumph.
Economists and market pundits are missing the point when they criticize the effectiveness of fiscal and monetary policy in a balance sheet recession (as academia, the IMF, OECD, Fed, etc, misguidedly criticized Japan's policies) for not fostering more GDP growth. The Keynesian role of governments during these recessions is not to borrow and spend in order to GROW, rather to borrow and spend to BRIDGE the gap, restore the money supply, and buy individuals and corporations enough time and to provide a conducive environment in which they are allowed to restore their balance sheets using the free cash flow they are able to still generate during this time. Not much different that backstopping a bank to prevent bank runs as all financial institutions are technically insolvent at any one point in time should all depositors demand their loans back in a simultaneous fashion.
One area I disagree with Koo on is the effectiveness of monetary policy. Koo seems to think it is almost entirely ineffective, but I see it as preventing further balance sheet destruction by propping up the asset values, the asset side of the balance sheet so that less repair and restoration is needed, presumably leading to a faster recovery. If your home value falls from $500,000 to $250,000 but would have fallent o $175,000 if not for Fed programs (MBS, treasury purchases, low rate environment), that is $75,000 less of deleveraging/recapitalization that individuals and financial institutions will need to endure.
The Keynesian role of governments during these recessions is not to borrow and spend in order to GROW, rather to borrow and spend to BRIDGE the gap, restore the money supply, and buy individuals and corporations enough time and to provide a conducive environment in which they are allowed to restore their balance sheets using the free cash flow they are able to still generate during this time. Not much different that backstopping a bank to prevent bank runs as all financial institutions are technically insolvent at any one point in time should all depositors demand their loans back in a simultaneous fashion.
One area I disagree with Koo on is the effectiveness of monetary policy. Koo seems to think it is almost entirely ineffective, but I see it as preventing further balance sheet destruction by propping up the asset values, the asset side of the balance sheet so that less repair and restoration is needed, presumably leading to a faster recovery. If your home value falls from $500,000 to $250,000 but would have fallent o $175,000 if not for Fed programs (MBS, treasury purchases, low rate environment), that is $75,000 less of deleveraging/recapitalization that individuals and financial institutions will need to endure.