August 31, 2007
Report from Jackson Hole
Here are some brief impressions about this morning's papers at the Federal Reserve conference.
August 29, 2007
Update on the fed funds market
One perspective on approaching the current situation
Since Jim laid out some of the proposals for addressing the mortgage problem, I thought I'd put in my two cents worth.
August 28, 2007
Solutions to the mortgage problem
Quick links to a few of the suggestions out there on what to do about pending mortgage defaults.
August 25, 2007
A disappearing budget deficit, if...
The CBO has released its budget and economic outlook update.
San Diego plans for the future
With all the excitement over the last few weeks, I never had a chance to mention this remarkable account of the long-run vision of San Diego's City Council.
August 24, 2007
Latest economic indicators
August 23, 2007
How does China retain monetary autonomy?
As I discussed in earlier posts, China retains some policy autonomy by virtue of the presence of capital controls. A recent working paper by Ma and McCauley attempts to quantify how binding the controls are.
August 22, 2007
Who knew holding short-term Treasuries could be so exciting?
August 21, 2007
Worse than 1998?
From IDEAGlobal, FX Alert, August 21:
August 20, 2007
What does the cut in the Fed's discount rate signal?
Some analysts, and perhaps the market, seemed to view Friday's cut in the Federal Reserve discount rate as a first step in lowering interest rates generally. That view may prove to be correct, though I'm inclined to look first for an explanation in terms of the narrow tactical challenges of managing current liquidity needs.
August 19, 2007
Saving Glut Reversed? A Historical Analogy and Conjecture about US Adjustment
One interpretation of recent global capital flows is that the collapse in investment in East Asia post-crisis, combined with stable saving rates in ex-China developing Asia, led to an excess of saving in that region (so really the term of "investment drought" is better). Note that there was no excess saving until the collapse of unsustainable lending associated with bubbles, or crony capitalism, or -- in other models -- behavior of investors implicitly "insured" against losses. While this is a voluminous literature, it's interesting to me that few analysts have observed that a similar occurence can not be ruled out in the current unfolding drama in the ever expanding but always containable subprime mortgage crisis.
August 18, 2007
Where's the risk?
Usually an economic downturn is associated in a big increase in the spread between corporate and Treasury yields. This spiked pretty dramatically last week, but still has a long way to go.
August 16, 2007
Part of the optimism regarding the economic outlook is based upon the robust growth -- to date -- in the rest of the world (see this post on the subject). The Euro zone looks like it's in for some slower growth, though.
August 13, 2007
Myths about, and Empirics on, Chinese Trade and FDI
There is a lot of hyperbole surrounding China's entry into the world trading system. There is fear in countries that compete with China, there is fear that China is somehow orchestrating the transfer of technological prowess from foreign to domestic firms, and a host of other anxieties.
August 12, 2007
China, Reserve Accumulation, and (Further) Threats to Financial Stability
From Financial Times:
August 11, 2007
Another roller coaster week
Glad I wasn't trying to provide a play-by-play explanation of fed funds futures last week. But whatever was going on, we seemed to end up with the same conclusion with which the week began.
August 10, 2007
What is a liquidity event?
It was an exciting week in financial markets, including some dramatic central bank interventions in short-term money markets.
August 09, 2007
The Administration Reassures the Markets
In light of the events of today, it makes sense for the President and his Administration to appeal for calm.
August 08, 2007
Variation in Global Economic Growth
In discussing the U.S. economy, I keep on seeing this refrain from Treasury Secretary Paulson (this one happens to be from the NYT)
August 06, 2007
Almost Everything You Wanted to Know about G-7 Current Account Imbalances
A new book is out examining whether -- and if so how -- ongoing current account imbalances will be unwound.
August 04, 2007
Interpreting fed funds futures
Despite what you may have read elsewhere, the probability of a fed funds rate cut has increased significantly over the last few weeks.
August 03, 2007
Revaluation and China's Multilateral Trade Balance: First Estimates
Yin-Wong Cheung, Eiji Fujii and I have just completed a paper entitled China's Current Account and Exchange Rate" for a conference on China's Growing Role in World Trade. This paper follows up on some of the issues I laid out in these posts: , , , and .
Weak employment reports
Wall Street took this as a weak jobs report, and it may be worse than people think.
August 01, 2007
July auto sales
This is not just another bad sales month.