They are now making jokes about death panels — not to pull the plug on Grandma in the reformed health-care regime, but to pull the plug on banks and other large institutions posing risk in the reformed financial regime. Preventing failure doesn’t seem to be the goal. Triggering and punishing failure are the goals. The [...]
First, we see our government low-balling the expected returns for the Tarp investments in banks so that an additional tax on banks can be justified—including banks that never receive the investments and excluding nonbanks that did. Now proprietary trading is verboten even though there is no evidence that it had anything to do with the [...]
Getting Curiouser and Curiouser Many mistakes were made during the Great Depression of the 1930s, and we seem determined to repeat all of them. They include starting a trade war with Smoot-Hawley, raising marginal tax rates in the middle of the depression, tightening monetary policy through misinterpretation of the meaning of excess bank reserves, [...]
Financial TV is full of talk about Governor Warsh’s opinion piece in Friday’s Wall Street Journal. One theory is that it was a shot across Chairman Bernanke’s bow. I doubt it, but even if it was in some limited sense, my experience on the FOMC for almost 14 years suggests to me that the following [...]
Yesterday, I defended Gentle Ben Bernanke. I said I believed him when he said he didn’t say something and said it would have been appropriate if he had. Or, something like that. A committee of Congress had his partner in non-crime on the hot seat today accusing him of saying something he had already acknowledge [...]
Once upon a time, people took rising interest rates as evidence of tighter money. Then, circumstances and growing sophistication led to recognition that rising inflation and/or rising inflationary expectations would show up in higher interest rates, especially longer-term rates. Then, apparently, everyone decided that rising long rates could ONLY be explained by easy money and [...]
Recently, I did three interviews on the banking crisis for the Las Vegas Money Show. I discussed whether federal bank bailouts are working, whether the banking crisis is over, and whether the banks will make windfall profits from lower fed interest rates.
People keep talking and writing about the explosion of the money supply and the coming inflationary tsunami. Let me point out once again that the M1 and M2 measures of the money supply spiked but have since come back down. There is no explosion of the money supply. I The monetary base (currency outstanding plus [...]
"Accounting Arcana" "It's fascinating that the not-so-tiny matter of a $30 billion loss comes down to accounting arcana, but it does." I copied that quote down last night when half asleep and this morning I can't recall where I got it. Now I can't find it. My best guess is the WSJ.com. My apologies [...]
If it weren't tacky to say I told you so, I'd refer you to my previous posts and interviews pointing out the dangers and pitfalls of the bank stress tests. They weren't just a mistake; they were a mistake anyone without sleep deprivation should have seen coming a mile away. It's not the biggest mistake [...]