Category: Financial Crisis

The Fed’s Recent Action on Swaps

What the Fed recently announced regarding its swap agreements should be helpful in forestalling a liquidity crisis in Europe, but it is not a “bailout” of anyone, and it does not increase any risk or cost to the U.S. taxpayer. It will help prevent a freeze up of European banks needing “dollar” liquidity. The swap […]

Nobody is Blinking, Unfortunately

Back during the debt-limit debate (July 18) that threatened to result in default or debt downgrading, I posted a blog with the title, “Who Cares Enough to Blink?” I was referring to King Solomon’s decision to split the baby in half, with the real mother’s backing off to save her child. The one who cared […]

U.S. Bank Exposure to Europe: De Minimus

These stats and commentary on U.S. bank exposure to European debt were provided by a friend of mine, Michael Durante, a hedge fund guy who specializes in large U.S. banks. I believe the legal term for their exposure is “de minimus.” Mike also believes that large U.S. banks are WAY undervalued by the market, as […]

The Surge in Money Growth: Meaningful or Meaningless?

Something dramatic is going on with the official money supply statistics, but its significance is hard to interpret. For a long time, even as the Federal Reserve pushed short term interest rates to very low levels, the broad measure of money, M2, grew only around 5 percent per year. While a Keynesian focus only on […]

Record Fed Profits Paid to Treasury

The Board of Governors recently announced a record $78.4 billion of Reserve bank earnings paid to the Treasury (and taxpayers) in 2010, up from a record $47.4 billion in 2009. These record earnings come from the growth in assets related to recent Fed policy. To the extent that outstanding Treasury debt is purchased by the […]

Too Dumb is Clever

According to Ogden Nash, “Too clever is dumb.” I’m not sure that’s true anymore. If so, it should curb the popularity of the Ben Ber-nak cartoon, but it feeds it instead. Too dumb has become clever. The ridicule centers on the Fed printing money, which it literally doesn’t do, by the way, but try telling […]

What Happened to the Celtic Tiger?

According to a sign in my office, it’s exactly 4,381 miles from Dallas, Texas, to Limerick, Ireland. That sign, a replica of an Irish road sign, was given to me by a colleague, Mark Wynne, who took my place in a forthcoming speaking assignment in Ireland when I retired from the Dallas Fed in November […]

Financial Reform: Fill in the Blanks

  The new financial reform legislation is massive:  about 2300 pages, 14 titles, 1400 sections. Yet,much of it is not in final form but is yet to be determined. It calls for 47 studies, 74 reports, 7 new government bodies or departments. We won’t know all the rules and the ultimate impact foryears. If the […]

Financial Reform: Who Pays?

First, since I know many are wondering, I wasn’t invited to today’s signing of the financial regulation reform legislation. The President is speaking as I write this. Once again, he, as is the case with many others, is saying that bank failures put the burden on taxpayers. If he, and others, had attended the signing […]

Stimulus or Austerity

Financial TV has displayed (or reflected) some confusion lately over U.S. and European policies. Europe seems to be adopting “austerity” measures–why haven’t we heard the term ‘root canal’ lately?–while our administration is advocating stimulus for Europe and even more stimulus for the U.S. What’s wrong? Doesn’t economic theory provide the answer and shouldn’t the answer […]