Bank capital NOT a constraint on lending

Here’s the response to Jan’s (Goldman) concern about lost capital constraining lending. Bank capital grows endogenously- it’s not a constraint on lending apart perhaps from the very near term. Banks ‘know’ the cost of capital, and the roe’s they need to make to pay for new capital. For example, if Citi paid ...Read More

FreddyMac house prices fall

NOTE THE HEADLINE BELOW VS THE STORY-PRICES ARE STILL UP YEAR OVER YEAR: Home Prices Suffer Biggest Drop In 25 Years (Reuters) U.S. home prices dropped the most in a quarter century in the three months to the end of September on an annualized basis as inventories, restrictive lending and a credit ...Read More

Surprise! CEOs Aren’t Too Worried About Economy

Fed says they watch this closely: Surprise! CEOs Aren’t Too Worried About Economy U.S. chief executives’ view of the economy improved in the fourthquarter, although they have become far more concerned about energy prices than they were a year ago, according to a survey by the Business Roundtable. The group said its ...Read More

FT.com – Oil – Rise in costs puts pressure on returns

Oil – Rise in costs puts pressure on returns RISE IN COSTS PUTS PRESSURE ON RETURNS By Javier Blas in Abu DhabiPublished: December 4 2007 01:08 Exploration companies need oil prices of $70 a barrel to match the returns they made at $30 a barrel just two years ago because of the ...Read More

BoC cuts rates

Makes a lot more sense to Central Bankers to cut with a strong currency than a weak one, particularly with the strong currency keeping prices below their inflation targets. The ECB, however, is looking at 3% cpi, and would rather not see the Fed cut, as they believe that would weaken the ...Read More

Review of Yellen Speech

(from an interoffice email) Karim: Quite a long one http://www.frbsf.org/news/speeches/2007/1203.html, but here goes, with selected excerpts, headings my own. If you don’t want to read the rest, one word describes it, DOVISH…if she was voting next week, she’d vote for 50bps. Warren: Agreed. Though the heightened inflation risks at the end do ...Read More

Cut mania spreading!

U.K. Economists Call for Immediate Rate Cut, TelegraphReports (Bloomberg)U.K. economists urged the Bank of England to cut interest rates as a matter of urgency after the sterling inter-bank market’s fastest decline in modern times, the Daily Telegraph reported. The volume of market loans in the banking system fell from640 bln pounds ($1.3 ...Read More

Chairman Bernanke on Food and Energy Prices

Letter to Editor of the Wall Street Journal that was never published. From Mr Warren Mosler. Dear Sir, Chairman Bernanke has recently stated the following before Congress: “…and futures quotes suggest that investors saw food and energy prices coming off their recent peaks next year.” – Testimony, Chairman Ben S. Bernanke,“The Economic ...Read More

2007-12-03 US Economic Releases

ISM was the big number – not a lot of new US numbers today. Unch; but employment component down 4.2pts to below 50 and anecdotes not very comforting and prices paid up, see below. What Respondents are Saying.. “Continued concerns regarding high oil prices, weak dollar and weak housing sector.” (Chemical Products) ...Read More

Saudis are Necessarily in Position of Price-Setter

Published November 16, 2007 in the Financial Times From Mr Warren Mosler. Sir, Adrian Binks’ letter “Oil price conspiracy theories get in the way of facts”(November 14) is precisely the response indicated in my letter (November 12); in this case from an energy information service. While Mr Binks’ statements are indeed factual, ...Read More