The Big Picture |  |
- Going Grassroots on Saving Statistical Abstract
- American Identity according to Social Media
- PIMCO’s Gross: QE1 and QE2 ‘destroyed’ credit creation
- Meta Infographic
- Bernanke speaks
- Jaguar C-X16 Concept: Entry-level Sports Coupe
- A possible dissent again on more Fed action
- New Recession or Double Dip?
- Trichet stands ground, to disappointment of some
- 10 Thursday AM Reads
| Going Grassroots on Saving Statistical Abstract Posted: 08 Sep 2011 01:30 PM PDT I posted here about the government’s plan to discontinue the 133-year-old Statistical Abstract, an invaluable tool for individuals and businesses alike. Regardless one’s political or economic stripes — Dem or Repub, Keynes or Hayek — there’s consensus about the importance and value of the Statistical Abstract. So, I ask the TBP readership to let their collective voice be heard by writing to the director of the Census Bureau, one Robert M. Groves (Robert.M.Groves(AT)census.gov). Be respectful and don’t be a potty-mouth. And if you’ve got an extra five minutes to kill, let your congress person know that you’d like the Abstract to be saved, apparently the budget that kills it has not yet been passed. Thanks.
            |
| American Identity according to Social Media Posted: 08 Sep 2011 01:30 PM PDT Click To Enlarge: Hat tip Mike R Source:
      |
| PIMCO’s Gross: QE1 and QE2 ‘destroyed’ credit creation Posted: 08 Sep 2011 12:21 PM PDT Bill Gross of Pimco appeared on Bloomberg Television’s “Surveillance Midday” with Tom Keene this afternoon to discuss the impact of the Fed’s asset purchases and the outlook for market reaction to President Obama’s speech tonight. Transcript after the jump . . .
Gross said that QE by the Fed “destroyed” credit creation, that he’d like to “see something bold” from Obama and that the markets will be “disappointed” if stimulus is below $300 billion. **MANDATORY CREDIT: BLOOMBERG TELEVISION** Video for viewing and embedding here: http://www.youtube.com/watch?v=xCTgOUKrVn8 Gross on credit creation: “This is really a cost of credit versus a creation of credit type of argument. There is no doubt that by purchasing longer-dated Treasuries that they would probably lower the cost of credit. My argument is the creation of it would it be destroyed and has been destroyed over the past several years during QE1 and QE2. To bring the point specifically to what occurred the past several months with a two-year Treasury extension and the conditional freezing of interest rates at 25 basis points for two years, you have that basically flat yield curve destroys systemic leverage…Credit is basically destroyed in the process of lowering and freezing interest rates.” On his investment outlook: “We have a number of suggestions in terms of what should be. What we think here in terms of what will be is that basically policy inaction and policy freezing from the standpoint of fiscal policy, which is where Bernanke wants to go in terms of his intended thrust going forward, but fiscal policy is basically frozen. Not just in the United States between Republicans and Democrats and the inaction in terms of the debt extension, but also in Europe between the north and south and who pays the bills. When you get in a period of time of high debt and when there comes a necessity to pay the piper in some form or fashion, there becomes significant arguments between interest parties. What we have seen now in euro land and the United States suggests the freezing of interest and inaction which provides no policy stimulus going forward.” On his policy recommendations for the U.S. economy: “I will take a few chances here in terms of policy recommendations. Governor Mitt Romney, the Republican, did that, and I commend him for it over the past week. I think what we need to do is incent American companies to not only buy American, but to produce American jobs. Let’s not necessarily go as far as recommending tariffs or walls in terms of imports, but let us talk about we do do as well to major corporations. The export-import thing in terms of what we have done for many years in terms of aircraft. And Boeing was a specific example. Why can’t we apply that concept to smaller businesses in terms of providing financing? The infrastructure bank that might be proposed by President Obama tonight begins to do that, but I suggest we go beyond that and provide a bank for small and medium-sized as well as large U.S. corporations.” On what he’d like to hear from President Obama in tonight’s address: “I need to see some gusto. I don’t think $300 billion really does it. When you break the program down about half of it is simply to continue existing programs. So we have less than 1% thrust in terms of new GDP types of programs, much of which is in 2012 and 2013 with the infrastructure bank. I would like to see something bold. I don’t think we are going to see it, and I think the markets will be disappointed eventually and probably disappointed tomorrow morning if we see something at $300 billion or less.” On the yield curve flattening out and resulting in a loss of credit: “What we have seen since 2008, and obviously this includes QE1, QE2, and the freezing the policy rates conditionally for the next two years, is that the growth size of the repo market which peaked in 2008 at about $6 trillion is now at $2.75 trillion. In terms repo alone, which is part of M3 and credit extension in terms of our banking system, we have seen the destruction of $3 trillion worth of repo over this period of time in which the Fed has basically brought down interest rates in the 2, 5, 7-year portion of the curve.” On how investors should react to the idea of the 30-Year bond being the new 10-Year note: “I think they should look at it that way to the extent the two-year treasury is inert. Basically the first five years of the treasury curve is frozen, does not move that much. So those who are looking for higher yield, they basically have to move out to the 10-year area and perhaps to 30 years…We’re in this different kind of world in which credit is extinguished, meaning that cash is held by banks.”
      |
| Posted: 08 Sep 2011 11:30 AM PDT
      |
| Posted: 08 Sep 2011 10:08 AM PDT Bernanke is not saying anything much different than when he spoke in Jackson. He is reminding the markets again that the Fed still has more levers to pull and they will discuss these at the next FOMC meeting. He remains optimistic that growth will pick up in the 2nd half and he cautions against any sort of fiscal tightening. Bernanke likes to shift growth responsibility to Congress now but it is Fed policy of collapsing the yield curve and the cost of money that has enabled the US government to spend money in a limitless fashion without any pushback from the market. On Aug 9th and Aug 26th, he said the Fed has more things to do if needed and today he repeated that again today. There is one thing though to have more things to do, it’s another thing to have them actually work. I assume on Sept 21st that the Fed will embark on buying longer term Treasuries with the proceeds from the sale of short term ones, thus buying the long end at historically low yields and highs in prices. The benefit is specious and the risk is that of subjecting their balance sheet to major interest rate risk if they choose to shrink it by selling some before the longer term securities mature. A dangerous game they play.
      |
| Jaguar C-X16 Concept: Entry-level Sports Coupe Posted: 08 Sep 2011 10:00 AM PDT Jaguar is previewing its upcoming entry-level sports car with the striking C-X16 Concept at the 2011 Frankfurt Auto Show. It gets a supercharged 3.0-liter V-6 with 375 horsepower on tap, but if you need more, an F1-style ‘push-to-pass’ button provides a momentary 94 horsepower burst of energy thanks to the concept’s innovative KERS hybrid system. More details on the 2011 Jaguar C-X16 Concept at Motor Authority
      |
| A possible dissent again on more Fed action Posted: 08 Sep 2011 09:30 AM PDT Two hrs before Bernanke speaks on the economy and likely lays out what the WSJ reported on its front page today “Fed Prepares to Act,” he seems to already have one dissenter, one that also dissented on Aug 9th. Fed voting member Plosser is saying he doesn’t think the Fed needs to provide new stimulus. Here are some headlines from DJ reporting his comments, “lower bond yields unlikely to help job market much,” “skeptical of monetary policy impact on unemployment,” “monetary policy may not be best tool to cure joblessness,” “recession not in my forecast,” “challenge to find ways to use monetary policy effectively,” “QE2′s only benefit was to lift inflation expectations,” “thought 2013 Fed pledge was bad idea,” “doesn’t think economy’s weakness will persist,” “Fed shouldn’t be too sanguine about inflation,” “inflation expectations muddled because of flight to safety,” and “doesn’t know what vote will be at next FOMC” meeting.
      |
| Posted: 08 Sep 2011 09:00 AM PDT > Are we heading into a new recession or a double dip? That seems to be a question on people’s minds as the economic activity softens. Here is my simple question: How many quarters of growth — anemic, or not — do we need before the next recession is officially a new recession, and not a double dip? Consider — the only real double dip on record was the 7 month recession from January to July 1980, followed by a new recession a mere 12 months later, lasting from July 1981 to November 1982. That is according to the NBER cycle dating committee. The “double dip” had a mere 12 months between the two. The present cycle saw the last NBER dated recession ending June 2009 — that was 27 months ago, assuming the recession started today. Since that recession, we have seen an increase in employment, manufacturing output, and retail sales. It has since plateaued at very modest level. But it is not accurate to claim that there has been no recovery — it is more accurate to say it has been a weak recovery. This hardly seems like a double dip — more like two distinct cycles.
What do you think — new recession or double dip? Source:
      |
| Trichet stands ground, to disappointment of some Posted: 08 Sep 2011 07:11 AM PDT Trichet cut both his ’11 and ’12 GDP estimates as he emphasized multiple times that ‘downside risks’ to the Euro area economy have ‘intensified.’ On inflation, he said that the risks are no longer to the upside but are now more balanced. On the key issue of bank funding, Trichet said that ‘monetary liquidity continues to be ample.’ As long as the ECB continues to be the lender of last resort they certainly are ample but the question now is whether the collateral pledged for that funding continues to be worthy. In terms of the market reaction and the US$ rally vs the euro, Trichet didn’t announce any new liquidity facilities (some were hoping for a 12 month one) and while he fully backed off from further rate hikes, he didn’t lean on cutting them anytime soon as the ECB is not a fan of negative real interest rates.
      |
| Posted: 08 Sep 2011 06:45 AM PDT This is what I am reading this morning:
What are you reading? >
      |
| You are subscribed to email updates from The Big Picture To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
No comments:
Post a Comment