Daily Archive: Tuesday, January 22, 2008

King Says U.K. Inflation May Match Fastest Pace in a Decade

States the issues clearly: King Says U.K. Inflation May Match Fastest Pace in a Decade (Bloomberg) Bank of England Governor Mervyn King said inflation may match the fastest pace in at least a decade this year and require an explanation to the Treasury, a sign that policy makers have limited scope to ...Read More

Summary of subprime bank losses

Spread around enough so no one went out of business, and most lost less then a quarter’s worth of earnings. And a chunk of it probably recoverable. It’s been a year and the total has to be at the low end of expectations, but could be a lot more to surface in ...Read More

Re: Will the cure be worse than the disease?

(an interoffice email) > the only problem i have with Meltzer is that is the consensus view now, > that inflation is a foregone conclusion-i think long term that may be > right (long term paper currency devaluation) but you could easily > correct commodity and energy prices if you have a ...Read More

Will the cure be worse than the disease?

Will the cure be worse than the disease? Right, the financial press will chop the Fed to ribbons if inflation continues higher, as I expect it will. But Bernanke is setting the stage for an even bigger recession down the road. Just as the ultra-low rates of the early 2000s created many ...Read More

Fed comments

The Fed is aware rate cuts don’t do much for near term financial disruptions. For example, the FF/LIBOR spread was first addressed with FF cuts, but little or nothing changed until the TAF was introduced to address and normalize that spread. Along the same lines, Bernanke has recently met with the President ...Read More

2008-01-22 US Economic Releases

FOMC Inter-meeting Rate Cut (Jan 22) Survey n/a Actual 3.50% Prior 4.25% Revised n/a The cut was fully priced in for next week, with a lesser probability for doing it today. The Fed is worried about ‘financial conditions’ and hopes to prevent them from spilling over into the real economy by doing, ...Read More

Meltdown?, continued..

Weakness: Equity markets still heading down. Commodity markets anticipate slowing demand. Credit markets anticipate additional rate cuts. First, a word on the bond insurers: A Fed rate cut won’t address the risk that an insurer failure could trigger panic selling by bond holders that require AAA ratings to hold their bonds. The ...Read More