By me. Not unusual mind you but this is a doozy. Ready for it? OK. Stanley Fisher was interviewed today on CNBC by America's newest financial heart throb, Sarah Eisen. Did a good Job. Stan was all smiles. Gave her a a beaut when questioned about Dodd/Frank. Said the most important thing with which one shouldn't mess was the Living Will. Wrong, Stan, very wrong.
Now to call Stanley Fisher wrong is generally unwise; for me to do it is downright dumb. Not in that league but Stan is wrong, wrong, wrong and because when Stanley Fisher speaks people listen I think it's important for the dissenting view--even from the peanut gallery-- to be heard. Stan, if J.P. Morgan fails, thee is no living will devised by mere mortals that will make a damn bit of difference, so let's stop kidding ourselves. Five seconds after the event it will be every man for himself--the hell with the women and children--and the only thing that stops it is the Fed...that's you Stan...telling everybody that they are covered. Sorry, but that's the real world inhabited by real people who get scared and act out of pure self-preservation. Unfortunately, there are too many recent examples of expectations based on long-held beliefs and even laws being dashed. I give you the bond holders of General Motors who are still trying to figure out what happened (me too). A living will? Surely you jest.
So there you are Stan, you might want to rethink this. If you need any help you know how to get in touch. Always glad to lend a hand to the smartest guy in the room.
Round one of the French elections is on Sunday in the shadow of the awful terrorist act of Wednesday. The importance of the ultimate result cannot be overstated. Sunday's results may provide a clue to the final event. For the fate of the EU it will be a very long day.
Finally, to close with a bit of wisdom, the Venezuelan situation is considerably more troublesome than the disaster portrayed on television. A few weeks ago Venezuelan military units crossed the Colombian border and occupied a border station for a number of days. Colombia wisely did not react and the Zulus withdrew. Start a war? Sure, why not? What do you have to lose and besides it gets everybody refocused. This could get truly awful.
Back next week
Showing posts with label Stanley Fisher. Show all posts
Showing posts with label Stanley Fisher. Show all posts
Friday, April 21, 2017
Wednesday, November 16, 2016
ANOTHER STANLEY CHAT
Stan Fisher was at Brookings yesterday. Subject? Market liquidity. I urge you to read the text as I think it is one of the most important topic that we shall face in the coming months. I wouldn't dare to paraphrase Mr. Fisher nor disagree with him but the latter course, if one were bold or dumb enough to take it is not really necessary in this case. I must say, Mr. Fisher is like an Alan Greenspan squared from the standpoint of trying to determine his real position on a subject. The difference is he lays out the arguments so clearly and consistently on both sides, dropping hints here and there, leading the listener or reader to what appears to be the "Ah Ha" moment only to remove it in the next three lines.
It's really a terrific piece for those who have an interest in these things.
In the end, Stan reaches the opinion that liquidity in today's markets is "adequate." Of course what "adequate" really is is not fully understood. His arguments are data driven but he freely admits that while there may be more trading today (volume) there is also much more product that ten years ago. And while there are "flash events" they seem to have been handled by the system and while there is undoubtedly less market action by banks the slack has probably been taken up by other players such as hedge funds. All well and good and supported by, as mentioned, the data. Mr. Fisher has said precisely what the Vice Chairman of the Fed should say, but I suspect--and one finds it in the tone of this speech--that he has not said it all.
In the past eight years, there really has been one way traffic in the markets and while there have been a few twists and turns, the general trend has been towards massive increases in debt both governmental and sovereign, declining interest rates and reasonable if not low volatility except for brief periods of disorder and "flash events." Not to be forgotten is that inflation despite monetary creation on the part of central banks has for all practical purposes been non-existent due to a variety of factors not the least of which have been low energy prices and a severe decline in economic growth in mature economies due primarily to governmental policies. That is about to change or at least the markets, over the past month or so seem to believe that things are changing.
It is one thing to say that in such a benine period what we have is doing just fine and quite another thing to expect that markets will react in the same manner in a period of heightened and continuous stress. Liquidity is never really an issue unless you need it...and then it is the only issue. And where I would take exception to Stan's analysis is in this: Paul Volker once said, "Banks are different." Banks and certain street firms were true market makers. Solomon Bros. was probably the best of the lot. In any issue in which they were a market maker there was always a bid...you might not have liked where it was but there was always a bid. If you needed to move Treasuries, there was always a bid from houses like J.P. Morgan, and Bankers Trust and others. Hedge Funds are not banks. There will not always be a bid and that becomes important not in times such as we have just experienced but in the future which by definition is unknown but about which warnings are being issued by the very people who might require the liquidity and...which is the true irony of the situation...may themselves be creating the need through the fear of circumstances which few of them have experienced. Stan mentioned in his talk that inventories at reporting institutions are down nearly 50% in the past eight years. Yet the amount of debt outstanding has doubled. If the VIX is any indication, risk has increased. So has the chance of a "tail event" which is the new catch-word of today. It seems that "Black Swan" tended to scare the crap out of people. By definition, you cannot prepare for whateever you want to call it. But you may be able to mitigate its consequences. We weren't ready in 2009. For a variety of reasons 2017 may be a really rough ride.
It's really a terrific piece for those who have an interest in these things.
In the end, Stan reaches the opinion that liquidity in today's markets is "adequate." Of course what "adequate" really is is not fully understood. His arguments are data driven but he freely admits that while there may be more trading today (volume) there is also much more product that ten years ago. And while there are "flash events" they seem to have been handled by the system and while there is undoubtedly less market action by banks the slack has probably been taken up by other players such as hedge funds. All well and good and supported by, as mentioned, the data. Mr. Fisher has said precisely what the Vice Chairman of the Fed should say, but I suspect--and one finds it in the tone of this speech--that he has not said it all.
In the past eight years, there really has been one way traffic in the markets and while there have been a few twists and turns, the general trend has been towards massive increases in debt both governmental and sovereign, declining interest rates and reasonable if not low volatility except for brief periods of disorder and "flash events." Not to be forgotten is that inflation despite monetary creation on the part of central banks has for all practical purposes been non-existent due to a variety of factors not the least of which have been low energy prices and a severe decline in economic growth in mature economies due primarily to governmental policies. That is about to change or at least the markets, over the past month or so seem to believe that things are changing.
It is one thing to say that in such a benine period what we have is doing just fine and quite another thing to expect that markets will react in the same manner in a period of heightened and continuous stress. Liquidity is never really an issue unless you need it...and then it is the only issue. And where I would take exception to Stan's analysis is in this: Paul Volker once said, "Banks are different." Banks and certain street firms were true market makers. Solomon Bros. was probably the best of the lot. In any issue in which they were a market maker there was always a bid...you might not have liked where it was but there was always a bid. If you needed to move Treasuries, there was always a bid from houses like J.P. Morgan, and Bankers Trust and others. Hedge Funds are not banks. There will not always be a bid and that becomes important not in times such as we have just experienced but in the future which by definition is unknown but about which warnings are being issued by the very people who might require the liquidity and...which is the true irony of the situation...may themselves be creating the need through the fear of circumstances which few of them have experienced. Stan mentioned in his talk that inventories at reporting institutions are down nearly 50% in the past eight years. Yet the amount of debt outstanding has doubled. If the VIX is any indication, risk has increased. So has the chance of a "tail event" which is the new catch-word of today. It seems that "Black Swan" tended to scare the crap out of people. By definition, you cannot prepare for whateever you want to call it. But you may be able to mitigate its consequences. We weren't ready in 2009. For a variety of reasons 2017 may be a really rough ride.
Friday, November 11, 2016
STANLEY HAS SPOKEN
In a conference hosted by the Central Bank of Chile of all people, Stanley Fisher revealed that in his opinion it looked as though it was about time for a gradual rise in interest rates. So much for uncertainty. The Fed will raise in December and continue to raise until...well, until it catches up with the market. Oh, the 10 year closed at 2.15% today.. From the standpoint of economic meddling, the Fed is dead and I would bet that the happiest guy in the room is Stanley.
What we are looking at in the near future is exactly what Stan Fisher has been quietly calling for and hoping for: if there is to be stimulus let it be of the fiscal kind and with it let there be a restructuring of economic governance in taxes, regulation and alike that has been so long needed in this and other western economies. I don't know what are Mr. Fisher's politics---frankly, I don't know if anyone does--but I suspect he is appreciative of how the markets are responding to Mr. Trump's election and taking the Fed out of a nasty little corner into which they had put themselves.
They are not out of the woods of course. There is a little matter of $4 Trillion on their balance sheet that they have to work off and there are rather clear signs that inflation is afoot the containment of which is their primary (some think otherwise--some are wrong) mandate through monetary governance. Spilling their balance sheet into the world is not exactly compatible with controlling inflation but this was always going to happen and one can only hope that there have been a few good folks thinking about this. And while we are on the subject of thinking, think about the greatest reversal of sentiment we have ever seen. From stated fears of total destruction of all things in the event of a Trump win we have seen the Masters of the Universe turn on a dime and buy the DOW to an all-time record close in the space of three days. Who the hell in their right mind would give their money to these guys to manage?
From now the tale will become how much of the Obama "legacy" will be dismantled in the next six months. Big Danny Tarullo will probably, in an operational sense wind up sleeping with the fishes if he doesn't decide to slip out the back door into the loving arms of Crazy Lizzy who, believing she is Ms. Clinton's natural sucessor, will want no part of him (she needs money...Wall Street has money...Wall Street hates him). Dodd/Frank will catch a good kicking but not entirely disappear which may not be a bad thing although how they are going to fix it is beyond my poor powers of comprehension. Somebody had better start thinking about the BIS meetings at which risk accountability will be a primary topic and since the meetings start on January 9, all we have is a very lame duck bunch of bankers and regulators to carry the flag. Not good. There had better be quick thought and even quicker action on the part of the Trumpsters in getting a message Over There and finding the right people to do it. Hint: Lael Brainard is not one of those people. I can supply a few names if anyone is interested. This could get ugly...more on that at a later time. There is so much more.
But the really great thing to watch in the coming months will be the interplay between the Trumpsters and Chuck Schumer in the Senate. Chuck replaces that most odious of creatures, Harry Reid, and while he will become the leader of the "loyal opposition," Chuck has always known on which side his bread is buttered and that is the side that reads "Wall Street." He's a nasty piece of political work but he's in a tough spot. Lizzy on his left, the Street (now) on his right, and his buddy The Donald in the White House..oh yes, they are good friends. This could be better than "Hamilton." The happiest guy around? Why me of course! I have material for at least...two years?
Have a great weekend!
What we are looking at in the near future is exactly what Stan Fisher has been quietly calling for and hoping for: if there is to be stimulus let it be of the fiscal kind and with it let there be a restructuring of economic governance in taxes, regulation and alike that has been so long needed in this and other western economies. I don't know what are Mr. Fisher's politics---frankly, I don't know if anyone does--but I suspect he is appreciative of how the markets are responding to Mr. Trump's election and taking the Fed out of a nasty little corner into which they had put themselves.
They are not out of the woods of course. There is a little matter of $4 Trillion on their balance sheet that they have to work off and there are rather clear signs that inflation is afoot the containment of which is their primary (some think otherwise--some are wrong) mandate through monetary governance. Spilling their balance sheet into the world is not exactly compatible with controlling inflation but this was always going to happen and one can only hope that there have been a few good folks thinking about this. And while we are on the subject of thinking, think about the greatest reversal of sentiment we have ever seen. From stated fears of total destruction of all things in the event of a Trump win we have seen the Masters of the Universe turn on a dime and buy the DOW to an all-time record close in the space of three days. Who the hell in their right mind would give their money to these guys to manage?
From now the tale will become how much of the Obama "legacy" will be dismantled in the next six months. Big Danny Tarullo will probably, in an operational sense wind up sleeping with the fishes if he doesn't decide to slip out the back door into the loving arms of Crazy Lizzy who, believing she is Ms. Clinton's natural sucessor, will want no part of him (she needs money...Wall Street has money...Wall Street hates him). Dodd/Frank will catch a good kicking but not entirely disappear which may not be a bad thing although how they are going to fix it is beyond my poor powers of comprehension. Somebody had better start thinking about the BIS meetings at which risk accountability will be a primary topic and since the meetings start on January 9, all we have is a very lame duck bunch of bankers and regulators to carry the flag. Not good. There had better be quick thought and even quicker action on the part of the Trumpsters in getting a message Over There and finding the right people to do it. Hint: Lael Brainard is not one of those people. I can supply a few names if anyone is interested. This could get ugly...more on that at a later time. There is so much more.
But the really great thing to watch in the coming months will be the interplay between the Trumpsters and Chuck Schumer in the Senate. Chuck replaces that most odious of creatures, Harry Reid, and while he will become the leader of the "loyal opposition," Chuck has always known on which side his bread is buttered and that is the side that reads "Wall Street." He's a nasty piece of political work but he's in a tough spot. Lizzy on his left, the Street (now) on his right, and his buddy The Donald in the White House..oh yes, they are good friends. This could be better than "Hamilton." The happiest guy around? Why me of course! I have material for at least...two years?
Have a great weekend!
Thursday, October 6, 2016
...AND IT IS GETTING ODDER
The time, said the Dane, is out of whack (he actually said "joint," but...). Tomorrow is September jobs number and nobody is really sure what's going to come out. Hint: It's 31 days to the election...think it's going to be a bad number? Which of course is what everyone else is thinking because it doesn't feel like it should be a good number but as everybody pretty much now realizes the numbers are cooked...well, that doesn't make anyone feel better either. There is more watching and waiting for this one than there has been all year whilst at the same time there is a perceptible feeling that a lot of people would be just as happy if nothing was to be released as it will only add to the confusion.
Rates were well up today with the 10 year at 1.74% which is right at the top of the range for the year and looking to go higher. Stocks were obviously down and the dollar was up as we old guys would say it should be on the higher rates but commodities were up as well which makes us old guys ask what the hell is going on here? If you are looking for an answer I don't have one but out of Washington, D.C. comes a few hints that all might not be so well in the alternative world of central banking as I suggested the other day.
Stanley Fisher gave a talk yesterday to the N.Y Fed and when Stan talks, people listen. This is a little Pow-Wow the Fed puts on from time to time for fellow central bankers which will cumulate on Friday concerning the state of affairs in central bank land. Yesterday, Stan got into the "Natural Rate," which for the life of me I don't understand but which appears to be the rate of interested (adjusted for inflation) that produces the best economic result. I know, me neither, but if Stan says it exists, it exists.
He also said it is very, VERY low these days which could lead to rapid and dramatic dislocations which, because of its level, may be hard to reverse and which, if it persists may also lead to continued economic stagnation. All stock and trade Stanley, very MIT-ish, very academic. But let me suggest another thing about Mr. Fisher: he has never been one to call a spade a spade outright. But he has always, if you listen real hard, been one to send a clear message, and yesterday's message was, in my mind, that we, my central bank buddies, may well have gone too far and we may have to start figuring out how we are going to extract our posteriors out of this crack into which they have fallen. Misunderstand that at your own risk.
And from D.C., according to my Deep Throats, there are mutterings. Surprisingly, some are beginning to figure out just what the past few years have accomplished which pretty much stops at a world wide debt bomb being constructed, an inability to price risk and of course the effect central bank policies have had on banks world wide...aside from a few other terrible things. Not surprisingly, Europe has probably suffered the effects the most, especially in its banking system, which is the primary provider of credit to the economy--but not when there is a loss involved. Europe is hurting and I think we are beginning to see the beginning of, if not a reversal, but a real slowing of QE type policies we have witnessed for years. The Bank of England admitted as much on Tuesday. Will the ECB be far behind? One can only hope but that mob's ability to amaze is boundless.
And yet, tomorrow is the number. Will anybody care what with everything else is swirling about? Depends upon on good they wish to make it. But in any case, it's not the story.
Rates were well up today with the 10 year at 1.74% which is right at the top of the range for the year and looking to go higher. Stocks were obviously down and the dollar was up as we old guys would say it should be on the higher rates but commodities were up as well which makes us old guys ask what the hell is going on here? If you are looking for an answer I don't have one but out of Washington, D.C. comes a few hints that all might not be so well in the alternative world of central banking as I suggested the other day.
Stanley Fisher gave a talk yesterday to the N.Y Fed and when Stan talks, people listen. This is a little Pow-Wow the Fed puts on from time to time for fellow central bankers which will cumulate on Friday concerning the state of affairs in central bank land. Yesterday, Stan got into the "Natural Rate," which for the life of me I don't understand but which appears to be the rate of interested (adjusted for inflation) that produces the best economic result. I know, me neither, but if Stan says it exists, it exists.
He also said it is very, VERY low these days which could lead to rapid and dramatic dislocations which, because of its level, may be hard to reverse and which, if it persists may also lead to continued economic stagnation. All stock and trade Stanley, very MIT-ish, very academic. But let me suggest another thing about Mr. Fisher: he has never been one to call a spade a spade outright. But he has always, if you listen real hard, been one to send a clear message, and yesterday's message was, in my mind, that we, my central bank buddies, may well have gone too far and we may have to start figuring out how we are going to extract our posteriors out of this crack into which they have fallen. Misunderstand that at your own risk.
And from D.C., according to my Deep Throats, there are mutterings. Surprisingly, some are beginning to figure out just what the past few years have accomplished which pretty much stops at a world wide debt bomb being constructed, an inability to price risk and of course the effect central bank policies have had on banks world wide...aside from a few other terrible things. Not surprisingly, Europe has probably suffered the effects the most, especially in its banking system, which is the primary provider of credit to the economy--but not when there is a loss involved. Europe is hurting and I think we are beginning to see the beginning of, if not a reversal, but a real slowing of QE type policies we have witnessed for years. The Bank of England admitted as much on Tuesday. Will the ECB be far behind? One can only hope but that mob's ability to amaze is boundless.
And yet, tomorrow is the number. Will anybody care what with everything else is swirling about? Depends upon on good they wish to make it. But in any case, it's not the story.
Friday, August 28, 2015
WASN'T THAT A FUN RIDE?
This week of course. It seems as though everyone is happy it's over probably because despite all of the comment it is widely recognized that all of it is guesswork and nobody really knows exactly what happened, why or most importantly, where we are heading. Maybe we need another week to sort that out.
There was quite an interesting and amusing moment this morning right at the start of the interview with Stanley Fisher on CNBC. Stan was asked by Steve Liseman if he would comment on Billy the Duds comments made earlier in the week. You might remember that Dudley was widely credited, although I am quite sure he was clueless, for stopping the stock rout with his statement that the reasons for a rate rise were "less compelling." Stan always has a bit of a sly smile before be kills you. It was there, he slaughtered The Dud, and of course the markets, which had been moving slowly higher all morning, stopped, reversed and started moving slowly downward all day. Nothing bad though; the DOW looked like it was trying to close flat and that's probably where it will wind up. But Stan did his thing...he kept 'em guessing and with the some more big data next week, this rate move could be in the cards making Charlie here about as wrong as I have ever been about things in a week. What threw the whole thing up in the air was the revised GDP number which, if believable, was quite something. Jobs next week and then we shall see.
That is not to say this week's "crisis" is over. No one has really sorted out the full macro direction and the noise being heard is to a great extent very nervous people trying to talk their book. It didn't seem to me as though there were a lot of true shorts out there--clearly there was short covering that resulted in the rally--but from determined shorts? I don't think so. The most interesting comments were that cacaphony of, "China really doesn't affect the U.S. too much." Maybe, but China affects everyplace else and someone, somewhere has to affect the U.S. The shift is going to be to Europe next week if they can cobble together anyone important to attend some previously scheduled meetings on Euroland in the last week of August (despite September beginning on Tuesday August always ends on a weekend). I for one, will be happy. I think I understand that mob a bit better. Inscrutable these Chinese, but it was fun.
Tuesday, June 2, 2015
I MEAN, THEY GET PAID FOR THIS?
Now I know it's a little strange out there sometimes, but there must be a full moon or something going on because with just two days gone in this week, things are nuts all around the world.
Yesterday, Stan Fisher made a speech up in Canada. Stan makes Alan Greenspan look like a writer of children's books..."See Spot run...run, run, run." No one understood what he was saying. Now I knew what he wanted to say (I think). He wanted to say that things weren't looking so bad so it was time to get on with the business of normalizing rates but he couldn't. He wanted to say that Dodd/Frank was a pain in the ass but he couldn't. He wanted to say that the less-than-sterling economic recovery was perhaps more of a structural problem than a financial one, but he couldn't. In fact what he supposedly did say was the opposite of all the things that I think he wanted to say...or so it was reported...but he didn't. One thing he was serious about was the almost off-hand remark that financial crises are not a thing of the past and the Fed doesn't have all the answers to prevent the next on, so let's stay on guard.
One would think that a speech like this by the Vice Chairman of the Board would be widely reported in today's press...but it wasn't. The press figured out that they didn't know what he said either.
So today we get Lael Brainard of the Fed telling us that the dollar and weather was the cause of the lousy first quarter numbers but not to expect a strong rebound in the second quarter. Huh? The weather's fine and the dollar has weakened so why not? Well I guess that means no rate hikes, eh? Not so fast says she, we may have to move after carefully considering all the data. Translation: don't hold your breath. Now Ms. Brainard is a serious political player and if she believes (which she does) that to get anywhere near the Administration's touted 3% growth rate coming into an election year with a middling second quarter after a -0.7% first quarter, we gotta keep pumpin' it out, baby, we have a real split on this Board. Stanley Fisher against probably everyone else. In matters of intelligence and economics, Stanley wins but not politics.
Were the openly contrasting views widely noted in today's press? I guess I missed it.
Finally, Over There, the Euros presented the Greeks with a series to requirements (none dare call them demands) and the Greeks presented the Euros with a plan of their own. A real love story: two ships that pass in the night. It reminds me of the battle between two cities in New Jersey many years ago over water rights. Jersey City sued Hoboken and won and promptly sent Hoboken a bill for somewhere in the neighborhood of $2,000,000. Hoboken had a checking balance at the time of about $16.53. A very good friend of mine, then the assistant corporation counsel for the then-blighted city was asked what he was going to do with the bill. His response? "I'm going to mark it, 'Deceased, return to sender.'"
The Euros had better decide whether they want the Greeks in or out. The Greeks have to decide the same thing. "Deceased, return to sender," seems to me to be an elegant solution for either side.
Oh, one more piece of craziness. Whilst Chrissy was trying to figure out how to get 1.8 billion Euros back from the Greeks, the geniuses in her wholly-owned economic think tank published a study (they are very good at studies) proving without a doubt that nations should simply forget about paying back their debts and just keep pumping it up to stimulate growth. Hell, who needed a study! The Greeks have been saying this all along! Once again, you can't make this stuff up. Look for Little Paulie Krugman to be all over this one in the Times ASAP proclaiming vindication and agreement with the mighty IMF! I just wonder how Angie is going to explain this one to Das Volk...especially as you can bet your boots in any plan the IMF gets paid first.
Its gotta be more than a full moon.
Yesterday, Stan Fisher made a speech up in Canada. Stan makes Alan Greenspan look like a writer of children's books..."See Spot run...run, run, run." No one understood what he was saying. Now I knew what he wanted to say (I think). He wanted to say that things weren't looking so bad so it was time to get on with the business of normalizing rates but he couldn't. He wanted to say that Dodd/Frank was a pain in the ass but he couldn't. He wanted to say that the less-than-sterling economic recovery was perhaps more of a structural problem than a financial one, but he couldn't. In fact what he supposedly did say was the opposite of all the things that I think he wanted to say...or so it was reported...but he didn't. One thing he was serious about was the almost off-hand remark that financial crises are not a thing of the past and the Fed doesn't have all the answers to prevent the next on, so let's stay on guard.
One would think that a speech like this by the Vice Chairman of the Board would be widely reported in today's press...but it wasn't. The press figured out that they didn't know what he said either.
So today we get Lael Brainard of the Fed telling us that the dollar and weather was the cause of the lousy first quarter numbers but not to expect a strong rebound in the second quarter. Huh? The weather's fine and the dollar has weakened so why not? Well I guess that means no rate hikes, eh? Not so fast says she, we may have to move after carefully considering all the data. Translation: don't hold your breath. Now Ms. Brainard is a serious political player and if she believes (which she does) that to get anywhere near the Administration's touted 3% growth rate coming into an election year with a middling second quarter after a -0.7% first quarter, we gotta keep pumpin' it out, baby, we have a real split on this Board. Stanley Fisher against probably everyone else. In matters of intelligence and economics, Stanley wins but not politics.
Were the openly contrasting views widely noted in today's press? I guess I missed it.
Finally, Over There, the Euros presented the Greeks with a series to requirements (none dare call them demands) and the Greeks presented the Euros with a plan of their own. A real love story: two ships that pass in the night. It reminds me of the battle between two cities in New Jersey many years ago over water rights. Jersey City sued Hoboken and won and promptly sent Hoboken a bill for somewhere in the neighborhood of $2,000,000. Hoboken had a checking balance at the time of about $16.53. A very good friend of mine, then the assistant corporation counsel for the then-blighted city was asked what he was going to do with the bill. His response? "I'm going to mark it, 'Deceased, return to sender.'"
The Euros had better decide whether they want the Greeks in or out. The Greeks have to decide the same thing. "Deceased, return to sender," seems to me to be an elegant solution for either side.
Oh, one more piece of craziness. Whilst Chrissy was trying to figure out how to get 1.8 billion Euros back from the Greeks, the geniuses in her wholly-owned economic think tank published a study (they are very good at studies) proving without a doubt that nations should simply forget about paying back their debts and just keep pumping it up to stimulate growth. Hell, who needed a study! The Greeks have been saying this all along! Once again, you can't make this stuff up. Look for Little Paulie Krugman to be all over this one in the Times ASAP proclaiming vindication and agreement with the mighty IMF! I just wonder how Angie is going to explain this one to Das Volk...especially as you can bet your boots in any plan the IMF gets paid first.
Its gotta be more than a full moon.
Tuesday, August 12, 2014
THE SMARTEST GUY IN THE ROOM
Stanley Fisher gave a little talk the other day in Sweden which of course no one understood. Oh sure, the usual suspects were unanimous in their reporting that Mr. Fisher was right on board with Janet's easy money policies as economies were still not showing the growth that was needed for a departure from the accommodative Fed policy. It is correct that is what he said; that, however, is not what he meant.
Stanley Fisher has always been nuanced. The real message in his talk was that which he slipped in almost as an after-thought and with great subtlety. In case you missed it he said maybe we are looking at this thing the wrong way. Maybe things have substantially changed in the world to the point where conventional monetary actions are no longer effective. Maybe political and fiscal responses, honed in a different era are no longer applicable and maybe the political calculus and institutions being used in the United States and elsewhere are not correct in their own sense. In short, what he said was do not look to us to solve the problem; it is not of our creation nor are we the solution. Yes, we will continue to help but unless policies are changed, expect little more than Horatius at the Bridge from us.
Think of it. This is pretty profound stuff and certainly not what one normally hears from today's central bankers weaned in the political process and seemingly always determined to stay on the good side of their political masters. But Stanley Fisher is not the usual run of the mill kind of guy. He is also The Smartest Guy in the Room and knows it--not with the condescending narcissism of some…Little Paulie comes to mind--but simply because he is. He needs no one to tell him and therefore simply speaks his mind. My one criticism of Mr. Fisher is that he plays with his audience. He seems sometimes to be smiling and chuckling in the background as I suspect he is today, waiting to see who among the lesser mortals finally figures it out. The problem with that is we are today led on many levels by seriously lesser mortals. I'm afraid he is going to be a bit more direct in the future which this remarkably gentle man will not like if he is to be effective, and if not, then the joke will be on us all.
Our house is about to go on the market. Dealing with Trouble and Strife through this period is not going to be easy. Stick by me. A few prayers wouldn't hurt as I kinda have grown fond of the old manse as well.
Stanley Fisher has always been nuanced. The real message in his talk was that which he slipped in almost as an after-thought and with great subtlety. In case you missed it he said maybe we are looking at this thing the wrong way. Maybe things have substantially changed in the world to the point where conventional monetary actions are no longer effective. Maybe political and fiscal responses, honed in a different era are no longer applicable and maybe the political calculus and institutions being used in the United States and elsewhere are not correct in their own sense. In short, what he said was do not look to us to solve the problem; it is not of our creation nor are we the solution. Yes, we will continue to help but unless policies are changed, expect little more than Horatius at the Bridge from us.
Think of it. This is pretty profound stuff and certainly not what one normally hears from today's central bankers weaned in the political process and seemingly always determined to stay on the good side of their political masters. But Stanley Fisher is not the usual run of the mill kind of guy. He is also The Smartest Guy in the Room and knows it--not with the condescending narcissism of some…Little Paulie comes to mind--but simply because he is. He needs no one to tell him and therefore simply speaks his mind. My one criticism of Mr. Fisher is that he plays with his audience. He seems sometimes to be smiling and chuckling in the background as I suspect he is today, waiting to see who among the lesser mortals finally figures it out. The problem with that is we are today led on many levels by seriously lesser mortals. I'm afraid he is going to be a bit more direct in the future which this remarkably gentle man will not like if he is to be effective, and if not, then the joke will be on us all.
Our house is about to go on the market. Dealing with Trouble and Strife through this period is not going to be easy. Stick by me. A few prayers wouldn't hurt as I kinda have grown fond of the old manse as well.
Wednesday, December 18, 2013
SO SHOOT ME
OK, I got it wrong, the Fed tapered. Starting in January, $5 billion comes off the amount of bond purchases…whoope-damn-do. Forward guidance remains extremely dovish with the discount rate targeted to remain at between 0.00%-0.25% for all of 2014. Now what "forward guidance" does is beyond me, as the factors that enter into the creation of such a beast can change in an instant but all in all it was the nicest of Christmas presents to the stock market as the DOW closed up some 297 points. Free money forever!
The more interesting question is if you're talking about $5 billion out of $80 billion a month, whatsupwiththat especially since it was revealed that the vote to taper was 9-1. So I ask, 9-1 for WHAT and with what conditions attached? I bet the answer is that this compromise having more to do with the future make-up of the Board than good, solid, central bank economics.
There are a couple of open seats. Lael Brainard, late of the Treasury, gets the international seat. Ms. Brainard is frightfully bright and well-educated and loathed--wait, that's a strong word--let's say intensely disliked by almost all who know her. She is a pure political animal of the "Yes sir, yes sir, three bags full sir" variety. Owned and operated by White House Inc. She also, it was reported, made it very clear that the Vice Chairmanship was to be hers. As my cousin Guido, now retired from the family business might have said, "This broad got some stones." Guido was never an anthropological wiz. Enter Stanley Fisher.
Mr. Fisher, in regard to the QEs has publicly been in the camp of "It can't hurt but it doesn't do much either." Nothing new there. But Stanley Fisher as the Vice Chair expressing such views is a whole different kettle of fish. Now there isn't anyone on that Board without a pretty fair sized ego, but a disagreement with Stan Fisher, no matter how small is not a winning strategy. Stan has also been around long enough to realize that conditions change very rapidly and I wouldn't be the least bit surprised if his views in regard to future guidance are similar to mine. I was in the room where in a discussion of the financial condition of the Republic of Colombia late in the last century, we were reminded by my good friend--let's call him Bobby C.--that the country's financial condition could flip overnight depending upon the disposition of the latest container load. I doubt if anyone in that room has forgotten that little excerpt from Life Lessons Learned.
So what we have I think is a compromise looking to the new disposition of the Board; one which puts off possibly contentious issue for some point down the road. It was also made fairly clear by the Chairman in his remarks today that we should stop looking at things like the employment rate or the job rate as triggers for a change in Fed policy. However, the inflation rate, which remains below 2.00% is highly important to this Board (N.B. to readership: do these guys ever shop). In short, I don't think much of anything happened today other than the table being set for the next round of players. Of course, everybody got a wee bit suckered. The Fed figured out that the tapering of the bond buying spree, whilst it had little effect during it's existence, was scaring the hell out of the markets and therefore the announcement of the continuation of the Money for Everybody posture was necessary. Bingo. Got it right. Now everyone is focused on interest rates. We understand those, right? But here's one thing: the 10 year hardly moved. Why? I haven't a clue, but it has been my experience that if you want to know what's happening, watch the bond market. I guess nothing happened.
And as for Stanley Fisher. I'm pretty sure the fix was in somewhere with someone. From the standpoint of someone like me looking for reasons why Mr. Fisher would want or need this job much less take it it looks like madness, yet as some guy I once knew said, yet there's method in it. We will probably never know the goings-on that brought this rather remarkable event to fruition, but I'm convinced--based on a whole bunch of conversations and pure supposition on my part--that Stan didn't ask for this job but was convinced to accept it. The wags in D.C. are saying The Leader is delighted; I think The Leader got bagged and we know The Leader does not talk to Republicans. Then again, I'm delighted which of course is what really counts.
The more interesting question is if you're talking about $5 billion out of $80 billion a month, whatsupwiththat especially since it was revealed that the vote to taper was 9-1. So I ask, 9-1 for WHAT and with what conditions attached? I bet the answer is that this compromise having more to do with the future make-up of the Board than good, solid, central bank economics.
There are a couple of open seats. Lael Brainard, late of the Treasury, gets the international seat. Ms. Brainard is frightfully bright and well-educated and loathed--wait, that's a strong word--let's say intensely disliked by almost all who know her. She is a pure political animal of the "Yes sir, yes sir, three bags full sir" variety. Owned and operated by White House Inc. She also, it was reported, made it very clear that the Vice Chairmanship was to be hers. As my cousin Guido, now retired from the family business might have said, "This broad got some stones." Guido was never an anthropological wiz. Enter Stanley Fisher.
Mr. Fisher, in regard to the QEs has publicly been in the camp of "It can't hurt but it doesn't do much either." Nothing new there. But Stanley Fisher as the Vice Chair expressing such views is a whole different kettle of fish. Now there isn't anyone on that Board without a pretty fair sized ego, but a disagreement with Stan Fisher, no matter how small is not a winning strategy. Stan has also been around long enough to realize that conditions change very rapidly and I wouldn't be the least bit surprised if his views in regard to future guidance are similar to mine. I was in the room where in a discussion of the financial condition of the Republic of Colombia late in the last century, we were reminded by my good friend--let's call him Bobby C.--that the country's financial condition could flip overnight depending upon the disposition of the latest container load. I doubt if anyone in that room has forgotten that little excerpt from Life Lessons Learned.
So what we have I think is a compromise looking to the new disposition of the Board; one which puts off possibly contentious issue for some point down the road. It was also made fairly clear by the Chairman in his remarks today that we should stop looking at things like the employment rate or the job rate as triggers for a change in Fed policy. However, the inflation rate, which remains below 2.00% is highly important to this Board (N.B. to readership: do these guys ever shop). In short, I don't think much of anything happened today other than the table being set for the next round of players. Of course, everybody got a wee bit suckered. The Fed figured out that the tapering of the bond buying spree, whilst it had little effect during it's existence, was scaring the hell out of the markets and therefore the announcement of the continuation of the Money for Everybody posture was necessary. Bingo. Got it right. Now everyone is focused on interest rates. We understand those, right? But here's one thing: the 10 year hardly moved. Why? I haven't a clue, but it has been my experience that if you want to know what's happening, watch the bond market. I guess nothing happened.
And as for Stanley Fisher. I'm pretty sure the fix was in somewhere with someone. From the standpoint of someone like me looking for reasons why Mr. Fisher would want or need this job much less take it it looks like madness, yet as some guy I once knew said, yet there's method in it. We will probably never know the goings-on that brought this rather remarkable event to fruition, but I'm convinced--based on a whole bunch of conversations and pure supposition on my part--that Stan didn't ask for this job but was convinced to accept it. The wags in D.C. are saying The Leader is delighted; I think The Leader got bagged and we know The Leader does not talk to Republicans. Then again, I'm delighted which of course is what really counts.
Friday, December 13, 2013
RUMOR STILL
But what a rumor it is and at this stage it appears to be more of a trial balloon.
Slowly the word leaked out that the now-empty seat of Vice Governor of the Federal Reserve, made such by the ascendancy of Janet Yellen, would be offered to Stanley Fisher who not long ago resigned as Chairman of the Central Bank of Israel.
Before speaking on the matter I'd like to see confirmation because this is one of the most significant developments of the year. But allow me to express this view: Stanley Fisher is probably the smartest guy in any room he's ever been in--save at the most one or two. He's is also, as the Brits would say, "a Gent." I'm in such a good mood I'm really looking forward to the weekend…even with 8 inches of snow.
Slowly the word leaked out that the now-empty seat of Vice Governor of the Federal Reserve, made such by the ascendancy of Janet Yellen, would be offered to Stanley Fisher who not long ago resigned as Chairman of the Central Bank of Israel.
Before speaking on the matter I'd like to see confirmation because this is one of the most significant developments of the year. But allow me to express this view: Stanley Fisher is probably the smartest guy in any room he's ever been in--save at the most one or two. He's is also, as the Brits would say, "a Gent." I'm in such a good mood I'm really looking forward to the weekend…even with 8 inches of snow.
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