We definitely need an exit plan from quantitative easing before we become too addicted to it and it leads to a new round of economic instability.
Not tapering would have delivered an effective slap on the wrist to the market, the combination of the SEP and the forward interest rate guidance together meant 'they did protest too much'.
How are the trials and tribulations of the rupee, the Brazilian real, the Turkish lira, the South African rand and the Indonesian rupiah connected?
For decades, you could always count on the Federal Reserve to pull the plug on prosperity too soon, seeing ghosts of inflation everywhere. The Fed, responsive as it was to creditors, preferred a dose of recession to any sort of price pressures, especially wage increases. That changed with the regimes of Fed chairmen Alan Greenspan and Ben Bernanke. Greenspan was willing to keep interest rates low because the banks kept getting into difficulty after bouts of speculative excess in the 1980s and '90s and needed the cheap money to rebuild their balance sheets. The ultimate such collapse occurred just five years ago this week, when the crash of Lehman Brothers revealed the rot in the entire system, and one over-leveraged domino after another fell. The Fed, after a somewhat anomalous run as the engine of recovery, seems to be reverting to type. Trouble is, the economy won't cooperate with this scenario. Inflation is nowhere to be seen, and the recovery continues to be weak.
Buckle your seat belts and hold onto your hats, because we're headed for a sharp curve. Believe it or not, I recommend the recruitment of one Hank Paulson for Fed chair.
The next Fed Chair will need to be more than another insider bureaucrat. She will need to be an action hero who can kill zombies (i.e. Milton Friedman clones) and save the planet.
The SEC has lost steam in its already very weak push against mortgage lenders and the investment banks that supplied them with money for alleged fraudulent lending.
An even bigger problem though is that by focusing so heavily on Summers, the president has inadvertently narrowed the field down to only two candidates: Larry Summers and Janet Yellen.
Inflation has fallen so low that it threatens this economic recovery, yet some Fed Governors are talking about ending the QE3 securities' purchases. ...
A Fed Chair who made it her mission to restore effective supervision would not choose "boring," "dull," or "bureaucratic" people. She would be putting a giant bull's-eye on her back and would ensure that she never have another boring day.
Sometimes, between sleep and the time I fully awaken, I have this fantasy about the Federal Reserve Chairman. I imagine that Ben Bernanke will testify before an exasperated, desperate Congress someday and say something like the following, perhaps near the end of his term...
Despite what is essentially a depression, the stock market rocks on. The reason for this is that the stimulus is really aimed at appeasing the "free market conservatives" who populate Wall Street banks and the executive suites of our multinational corporations.
The next few weeks are critical in determining whether or not the economy is on a self-sustaining path.
On Saturday, President Obama stated that he wants the next chairman of the Federal Reserve to not just be an economic wonk but to actively promote policies that will advance the welfare of ordinary citizens. He may as well have described the resume of Robert Reich.
There are worse things in life than terrible phone manners, imperiousness and excessive confidence, but these traits have just become more relevant amid the disclosures that Larry Summers appears to be the front-runner to take over as Federal Reserve chairman assuming Ben Bernanke steps down early next year.
Reporters, journalists and stock market investors are fixated on Federal Reserve Chairman Ben Bernanke's statements about the Fed's $85 billion per month giant stimulus. A major problem is that there is no giant Fed stimulus.