Fed avoids moving markets

The dollar headed south after the fed's decision to continue it's mortgage backed securities purchase program, mainly from the two GSE's, Fannie and Freddie. Only one fed offical reccomended winding the program down at this time. The central bank is keen not to raise interest rates too quickly, but will rather pursue repurchase agreements with primary dealers and other counterparties to mop up extra liquidity. Many parties are worried that this excess liquidity is having larger implications in the near and medium-term than central bankers realize, and that removing government capital from the market any time soon will be a difficult transition.

European Central Bank annual report on international role of the euro

This is the eighth issue of the annual review of the
international role of the euro. It reviews trends
in the use of the euro by non-euro area residents
in global markets and in individual countries
outside the euro area, and aims to deepen the
Eurosystem’s analytical understanding and
statistical coverage of the international use of
the euro.

Philadelphia Fed President on US economy

IMF allocates $250 billion in Special Drawing Rights (SDRs) to stimulate world economy

The International Monetary Fund (IMF) is planning to inject $250 billion into the global economy to bolster countries’ reserves as part of measures to combat the world economic crisis.
The IMF’s Executive Board on July 20 backed an allocation of Special Drawing Rights (SDRs) —an IMF reserve asset—equivalent to $250 billion to provide liquidity to the global economic system by supplementing the Fund’s 186 member countries’ foreign exchange reserves.
The equivalent of nearly $100 billion of the new allocation will go to emerging markets and developing countries, of which low-income countries will receive over $18 billion. The proposal will now be submitted to the IMF’s Board of Governors for final approval.

Bloomberg - Bernanke Seeks to Cordon Off Monetary Policy From Lawmakers

By Craig Torres

July 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke sought to cordon off the central bank’s independence on monetary policy from congressional scrutiny as lawmakers challenged its authority on everything from currency swaps to emergency loans.

The 55-year-old Fed chairman yesterday stepped up his defense of the central bank as it faces a bill with 275 legislator-sponsors to repeal immunity from audits of monetary policy. Bernanke told the House Financial Services Committee that Fed actions helped avert a credit “collapse,” and gave Congress its own task: cut “unsustainable” budget deficits.

As lawmakers embark on the biggest financial-regulation overhaul in generations, “everything is up for grabs,” including Fed independence, said Christopher Rupkey, chief financial economist in New York at Bank of Tokyo-Mitsubishi UFJ Ltd. It would “open a Pandora’s box” for Congress’s Government Accountability Office to probe monetary policy, he said.

Human Rights Group Campaigns To End Use Of Child Politicians In Africa

Slate - Eliot Spitezer on the regulatory charade

Does it strike you as odd that the American government has invested $115 billion in TARP money alone in Citibank, JPMorgan Chase, and Bank of America, fully 70 percent of their market cap ($164.5 billion, as of March 30), yet we have virtually no say in the management or behavior of these banks? Does it seem even odder that these banks are getting along extremely well with the government regulators who should be picking them apart for having destroyed the economy and financial system?

Financial Times - China to deploy foreign reserves

By Jamil Anderlini in Beijing

Beijing will use its foreign exchange reserves, the largest in the world, to support and accelerate overseas expansion and acquisitions by Chinese companies, Wen Jiabao, the country’s premier, said in comments published on Tuesday. “We should hasten the implementation of our ‘going out’ strategy and combine the utilisation of foreign exchange reserves with the ‘going out’ of our enterprises,” he told Chinese diplomats late on Monday. Mr Wen said Beijing also wanted Chinese companies to increase its share of global exports. The “going out” strategy is a slogan for encouraging investment and acquisitions abroad, particularly by big state-owned industrial groups such as PetroChina, Chinalco, China Telecom and Bank of China.

Reuters - Africa alone

The good news for Africa when the global financial meltdown began was that its financial markets were generally so far behind the rest of the world that groups such as the World Economic Forum reckoned that there was little or no danger. A new paper, posted on the economic research website VoxEU, suggests that that might be a bit too optimistic.

Tilburg University economist and former World Bank official Thorsten Beck – along with the World Bank’s Michael Fuchs and Marilou Uy — write that despite shallow financial markets, sub-Saharan Africa is unlikely to escape the repercussions of the financial crisis. Indeed, they argue that the crisis is threatening what little progress has been made to reverse what they call the alarming superficiality of African finance.

Ali-G Euthanasia

BBC - Arnold strikes a deal on California budget

Governor Arnold Schwarzenegger and leading California legislators say they have agreed a plan to close a state deficit of more than $26bn (£17bn). Mr Schwarzenegger said the plan would include $15bn of spending cuts and no significant tax increases.
Legislators said they were hoping to vote on the plan on Thursday. Mr Schwarzenegger declared a fiscal emergency earlier this month after legislators missed a deadline to agree a budget for the coming financial year. Amid a protracted fiscal crisis, the office of the state controller has been sending promissory notes, or IOUs, to thousands of contractors and vendors providing state services.

Michael Lewis on the end of an era

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.

I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.

Founder of Vanguard Group weighs in on financial crisis

The Economist - Government Sachs

(from the economist print edition)

TO THE survivors, the spoils. That is the cry going up at Goldman Sachs after it chalked up recession-defying—nay, record-breaking—quarterly profits on July 14th. Minting more than $3 billion in three months, so soon after its own near-death experience in the wake of Lehman Brothers’ demise, will enhance Goldman’s reputation as Wall Street’s overachiever. But it will also strike some as obscene given the scale of public support needed to keep the firm and its peers from buckling last year.

The first half of 2009 was fertile territory for investment bankers as markets rebounded and companies (not least banks themselves) rushed to raise debt and equity. But none of the banks due to report after The Economist went to press, not even a resurgent JPMorgan Chase, was expected to come close to Goldman’s blowout performance. Having incurred smaller losses than rivals, it is still prepared to deploy risk capital where others fear to tread.

K@W - Chairman of the Joint Chiefs talks leadership w/Wharton MBAs

Admiral Michael Mullen, Chairman of the Joint Chiefs of Staff, talks about leadership as "understanding accountability" and "being held to an accountability standard."

Financial Times - CIT gets bailout from bondholders

By Henny Sender and Francesco Guerrera

CIT’s board on Monday approved a two-year, $3bn rescue package with a group of lenders enabling the troubled US finance group to avoid a bankruptcy filing, after round-the-clock weekend talks.

One party to the financing said: “This paves the way for an orderly restructuring of the balance sheet with time and capital. And it will give CIT’s customers plenty of capital.”

The company, which provides finance to nearly 1m small and medium-sized companies in the US, and its creditors had to move quickly to arrest a slide into bankruptcy and prevent its best customers from defecting for fear the lender could no longer support them.

Bloomberg - Bernanke intends to keep rates low for "foreseeable future"

By Scott Lanman

July 20 (Bloomberg) -- The U.S. Federal Reserve is “confident” of its ability to stem inflation after what’s likely to be an “extended period” for policies aimed at restarting lending, Chairman Ben S. Bernanke said.

“When the economic outlook requires us to do so,” the central bank will employ a series of tools to tighten policy, Bernanke said, writing in an opinion piece in the Wall Street Journal.

Bernanke outlined five ways the central bank will be able to prevent the record reserves that banks have accumulated from causing money supply and inflation to surge. Officials will use the interest rate on banks’ deposits with the Fed as a principal tool, which they can supplement with other means, including reverse-repurchase agreements and term deposits, he said.

Reuters - Larry Summers on stimulus, deficit

By Emily Kaiser

WASHINGTON (Reuters) - The Obama administration's $787 billion stimulus package is working despite rising U.S. unemployment and stabilizing the economy must take precedence over tackling the bloated deficit, a top White House economic adviser said on Friday.

Lawrence Summers, head of the National Economic Council, also defended President Barack Obama's "ambitious" policy agenda, saying addressing big issues such as health care and energy reform would lay the foundation for future prosperity.

Obama made creating or saving jobs the measure of success for the stimulus package he signed into law in February, so the White House has taken considerable heat as the U.S. unemployment rate hit a 26-year high of 9.5 percent in June.

Some critics have argued that rising joblessness shows the stimulus package is not working, while others contend the spending plan was too small to begin with and a second dose was needed.

Boston Fed - future of skilled labor in new england

by Alicia Sasser

This report investigates an issue critical to the region’s economy: our ability to attract and retain college graduates to meet current and future labor force needs. Many are concerned that an inadequate supply of skilled workers in New England will deter companies looking to locate or expand within the region. Since 2000, the population of recent college graduates in New England has been growing more slowly than other parts of the United States. This research report investigates the factors that affect the stock of recent college graduates, how those factors have changed over time, and their relative importance in explaining the slower growth of this segment of the labor force.

GAO chief Dave Walker - US economy is unsustainable

Bloomberg - Orzag says opponents balking on healthcare

By Edwin Chen


July 19 (Bloomberg) -- White House Budget Director Peter Orszag said opponents of overhauling the U.S. health-care system are trying to run out the clock and that the White House still wants Congress to produce legislation by August.

“We need to get this done,” Orszag said on CNN’s “State of the Union” program. “We want to get it done by August.”

Orszag’s comments underscored the mounting tensions between President Barack Obama and many lawmakers of both parties over his deadline for each house of Congress to pass its version of health-care legislation before leaving early next month for a monthlong summer recess.

“It’s the typical Washington bureaucratic game of, if you don’t have a better alternative, just delay in the hope of that kills something,” the budget director said on CNN. “There are those who are advocating delay just as a desperation move to try to kill it.”

Orszag exempted from his accusation “many” lawmakers who, he said, are “actively participating in the debate.”

The Onion - bullshit is important to voters

Poll: Bullshit Is Most Important Issue For 2008 Voters

Slate - Eliot Spitzer on the expanding role of the Fed

The Federal Reserve Bank has managed through most of its history to reside in obscurity—little understood, rarely questioned, viewed as hovering above the political fray, the domain of technocrats and erudite economists. That should all change.

The Fed's power over all things economic is hard to overstate, and it now desires even more, seeking the title of "systemic risk regulator." Some of us have argued that regulators—and the Fed in particular—have had virtually all the power they needed to avert the economic traumas we have been living through: They just failed to use it. Yet the proposed formalization of the Fed's mega-regulator role requires that we lift the veil that has shielded it from scrutiny for too long.

K@W - hedge fund clampdown

Baseline Scneario -financial crisis for beginners

We believe that everyone should be able to understand how the financial crisis came about, what it means for all of us, and what our options are for getting out of it. Unfortunately, the vast majority of all writing about the crisis – including this blog – assumes some familiarity with the world of mortgage-backed securities, collateralized debt obligations, credit default swaps, and so on. You’ve probably heard dozens of journalists use these terms without explaining what they mean. If you’re confused, this page is for you. Over time, we will be adding more explanations and more links to external sources, so check back for updates. (Some of the explanations on this page are simplified and not 100% accurate; their goal is to explain the key concepts to a general audience.)

US to trade in gold reserves with cash4gold.com

US To Trade Gold Reserves For Cash Through Cash4Gold.com

Geithner on taxpayer-funded bailouts

The state of economics: The other-worldly philosophers | The Economist

The state of economics: The other-worldly philosophers | The Economist

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