Paulson text

[Skip to the end] “During the two weeks that Congress considered the legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets—our initial focus—would take time to implement and would not be […]

NYT: Fed to Give A.I.G. $85 bln Loan and Takeecon

[Skip to the end] The Fed has a major strategic advantage over private sector buyers. With the Fed making the loan, credit spreads in general should narrow. This will add value to AIG’s short credit position which is where most of the mark to market losses are. So the Fed’s actions to reduce systemic risk […]

Thoughts on the bailout of Freddie Mac and Fannie Mae

[Skip to the end] It comes down to public purpose. The agencies were set up to provide low cost funding for moderate income home buyers. They have done that reasonably well. However, for probably 20 years I’ve been saying the agencies should fund themselves directly with the Treasury or Fed financing bank (same as Treasury). […]

Bloomberg: Paulson continues weak USD policy

[Skip to the end] Seems Paulson is still blocking foreign CBs from accumulating USD financial assets. This is a negative for the USD and a negative for US real terms of trade. It does support US exports and reduces the need to add to domestic demand, even as US consumption remains low. Yuan Rises Most […]

Bloomberg: Stern Says Fed Rate Rise `Can’t Wait’ for Markets to Stabilize

[Skip to the end] A minority view but a growing one. They are thinking the low rates are destabilizing the housing and financial markets via the weak USD channel. Stern Says Fed Rate Rise `Can’t Wait’ for Markets to Stabilize by Vivien Lou Chen (Bloomberg) Federal Reserve Bank of Minneapolis President Gary Stern said the […]

FT: Time for comrade Paulson to pull the plug on the Fannie and Freddie charade

[Skip to the end] Totally misguided regarding public purpose. For one thing, the shareholders of the agencies are still there for ‘market discipline’ – all that’s been done for them is eliminated liquidity issues, not solvency issues. At the end of the day a lot of houses were built for a lot of people who […]

Schmidt of RBS favors USD over Euro — a turning point?????

[Skip to the end] Bloomberg News Video Clip Maybe, but… It will be tough for the USD index to move up without the CBs and monetary authorities buying it, and that means crossing Paulson and accepting being labeled a ‘currency manipulator’ and ‘outlaw.’ And the higher crude prices mean USD spent on imports increase and […]

Money (USD)

My take on the USD: It was at a level based on foreigners wanting to accumulate $70 billion per month which also = the US trade gap (accounting identity). Most of that desire to accumulate came from foreign CBs trying to support their exporters, oil producers accumulating USD financial assets, and foreign portfolios allocating some […]