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’Through the looking glass with US Treasuries and gold
We’ve been harping on for a while now about how a scarcity of quality collateral in the market (read US Treasuries) has been wreaking havoc in the repo markets — and how QE-related large scale asset purchases have only added to the problem.
Liquidity lessons
Two pertinent ones, via London Banker:
Liquidity means you can generate cash from a physical asset or paper claim.
If you can’t exchange the asset for a major currency to meet a sudden funding need,
Jedi Economics
If Paul Krugman (and others) are right, classical monetary policy goes out the window in a world where nominal interest rates are zero bound. All the usual monetary tools at the disposal of central bankers just don’t work.
Dick Bove on QE2 as a bank-less “financial war with China”
We all know Dick Bove ♥ banks — sometimes to a fault.
But the Rochdale Securities analyst brings up an interesting QE2-related point in his latest note. The Federal Reserve’s first round of quantitative easing,
Deutsche on the liquidity trap – and the last hurrah
Quantitative Easing v2.0 is almost entirely expected, at this point.
But it’s also something else, according to Deutsche Bank. It’s one last chance to avert a real liquidity trap and — intriguingly — to avert a retirement industry crisis.
Take that, Niall — Krugman was right all along
By Jove, Krugman was right!
Even if that assessment springs from lips of Paul Krugman himself, we have to say the evidence increasingly seems to confirm it.
Krugman’s point was always that inflationistas,
Chorus of QE calls is deafening
After the US payrolls come the QE-cries.
Analysts and economists seemed to be falling over themselves over the weekend in their haste to call for more unconventional monetary policy ahead of the Federal Reserve’s meeting on Tuesday.
Examining the US liquidity trap
The Fed has published an interesting working paper on the subject of foreign shocks to a country bound by zero rates. Authored by Martin Bodenstein, Christopher Erceg and Luca Guerrieri, it seems roughly to conclude that a zero-rate liquidity trap has the effect of amplifying the effects of a foreign shock on GDP.
Central bankers look to biology!
Sean Corrigan of Diapason Commodities presents an interesting metaphor for recent Keynesian measures to restart the world economy in his latest report.
Specifically he looks at cell biology and the role of adenosine tri-phosphate (ATP) in the body.
Green shoots panned
Another day, another notable green-shoot whacker emerges. Thursday’s turn is that of former Federal Reserve Chairman Alan Greenspan.
As Bloomberg reports (our emphasis):
May 21 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan signaled that the financial crisis has yet to end even as borrowing costs tumble,