Family Reunion at Jackson Hole

You can title your conference whatever you want, but the actual content will depend on the speaker list.  The convenors of the Jackson Hole Economic Symposium apparently hoped to generate discussion about “Designing Resilient Monetary Policy Frameworks for the Future“.  Having read all the papers, I can report that only one of them really engages the conference title.  Everyone else

Read more

EME vulnerabilities and the Fed

On 13 September the BIS released its latest Quarterly Review placing emerging market vulnerabilities at centre stage.  On 17 September, the FOMC voted against raising its target policy rate, citing near-term headwinds for the US coming from abroad.  “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in

Read more

What does repo do?

The Office of Financial Research is out with a new “Reference Guide to U.S. Repo and Securities Lending Markets” which collects together in one place most of what is known, and draws some attention to how much is not known, about this key bit of monetary infrastructure. Kudos to the authors for treating repo and securities lending in the same

Read more

Turbulent Exit?

In a followup from their much-discussed (by me here) May memo, Pozsar and Sweeney predict “A Turbulent Exit” when the Fed begins to raise rates.  FT Alphaville and Bloomberg both appreciate the importance of the memo, but focus attention on the exchange rate dimension, and so miss the main point.  Let’s walk through the argument more slowly, so as to

Read more

The Fuss about Market Liquidity

The recently released PwC “Global Financial Markets Liquidity Study”, sounds a warning.  Financial regulation, while perhaps well-intentioned, has gone too far.  Banks may be safer but markets are more fragile. At the moment, this fragility is masked by the massive liquidity operations of world central banks.  But it will soon be revealed as, led by the Fed, central banks attempt to exit.

Read more

The World in Depression, a Money View

Does this sound familiar?  Falling commodity prices, unsustainable official debts, crashing stock markets, pullback in global lending by dominant megabanks, misaligned currencies, plus a healthy dose of political dysfunction. These are the ingredients, according to Charles Kindleberger, that made for world depression in 1929-1939.  “My contention is that the difficulty lay in considerable latent instability in the system and the

Read more

Flash Crash explained by HFT

The official report on events of October 15, 2014, is now public and it makes fascinating reading.  Most news accounts of the report have taken its bland no-smoking-gun conclusion at face value, but if you actually read the report a rather clear picture emerges, along with some rather obvious unanswered questions.  Bloomberg has the best account, but there is more

Read more

Old economic thinking is the problem, says BIS

The 85th Annual Report of the BIS is not perhaps the obvious first choice for beach-reading on a holiday weekend, but having read through its 119 pages, the core message reminds me of nothing so much as the most memorable line of the 40-year-old summer blockbuster “Jaws”:  “You’re going to need a bigger boat.” Notwithstanding everything that has been done since

Read more

Home (and solvency) bias at the Fed

At the INET conference in DC yesterday, Janet Yellen and Christine Lagarde both gave brief statements, and then they asked each other questions, back and forth, until the moderator called time. No surprises in any of it, perhaps, but still a useful check on the current thinking of the leaders of the Fed and the IMF respectively, and as such

Read more