September 30, 2007
Foreign Exchange Market Transactions and Reserves: Recent Statistics
There's been a cornucopia of forex market information released in the past week, which I'm only now getting to. First, the BIS has released the preliminary results from its Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity, conducted in April of this year. The results are interesting, insofar as they confirm trends evident in the previous survey in 2004. Second, the IMF released its most recent tabulation of foreign exchange reserve holdings (COFER).
September 29, 2007
Nattering Naybob condemns the injustice in the Vonage court decisions.
September 28, 2007
Bugged by Excel
A colleague calls my attention to the fact that Excel 2007 is prone to a curious arithmetic miscalculation.
September 27, 2007
Yes, housing can go down even more
Today's Census Bureau report on the number of new homes sold in August provides our first clear data for the impact on the housing market of the financial turmoil that began August 9. It is not a pretty sight.
September 26, 2007
Perspective on Selective Fiscal Restraint and the Bush Administration
As the President and the Congress head to a showdown over SCHIP, it might be useful to see how, over the 2000-2005 period, the Federal government's fiscal exposure evolved.
September 25, 2007
More troubles for housing
New data released today portend continued weakness for housing.
September 24, 2007
What would be the implications of stagflation for the dollar?
The dollar is declining, with no apparent support. That's because the recessionary factors seem to be dominating. But a reporter's question about what factors might support the dollar prompted me to think about other influences that might work in a direction opposite the forces alluded to in the conventional wisdom.
September 23, 2007
Money creation and the Federal Reserve
There seem to be some misconceptions about the monetary consequences of actions that the Federal Reserve has taken to address liquidity needs.
September 21, 2007
If Iraq becomes West Germany
Some people have argued that the occupation of Iraq could evolve into a West Germany type situation. CBO has assessed the costs of this eventuality.
September 20, 2007
The President Prognosticates (on the Economy)
From the LA Times:
Forward rates and inflation expectations
Forward rates on Treasury bonds tell an interesting story about the market's reaction to the Fed's interest rate cut on Tuesday.
September 19, 2007
Divining the Dollar
The dollar declines in response to the drop in the target Fed Funds rate. What next?
September 18, 2007
50 it is
For the first time in 5 years, markets were actually unsure what the Fed was going to do, with yesterday's fed funds options calling it an even chance that the Fed would settle for a 25-basis-point cut or go all the way to 50. Capital Chronicle had prepared amusing posters as to just how to interpret a 25-basis-point as opposed to a 50-basis-point cut. Fifty it was, disappointing perhaps knzn who wanted a 175-basis-point cut, but delighting economic researchers like Refet Gurkaynak and Eric Swanson who both emailed me their high spirits at finally getting another data point for what happens when the Fed surprises the markets.
Four Observations on Import and Export Prices and the Dollar
Some delayed reflections on exchange rates, trade prices, and the messages from the August data.
September 17, 2007
Economic indicators of success in Iraq
Some economists have been interpreting economic developments as shedding light on the success of the military surge in Iraq. I think one needs to use a bit of caution in drawing conclusions from such evidence.
September 16, 2007
Is Bush an Economic Conservative? Does He Analyze?
Greenspan says no, on both counts.
September 15, 2007
Catch the wave
I keep trying to warn my friends in the Federal Reserve about the tsunami that's coming their way.
September 14, 2007
The commercialization of space
Google seems to be thinking big.
September 13, 2007
Saving Glut Redux
Bernanke recaps his interpretation of the explanation for global imbalances. Is it any more convincing than the first time?
September 12, 2007
Perspective on the Surge and US Losses
I thought it would behoove us to actually inspect the data and look at the trends (as opposed to listening to Administration officials) associated with operations in the Iraqi theater.
OPEC production quotas
How should we interpret yesterday's announcement from OPEC?
September 11, 2007
The Decoupling Scenario: Pre-Assessment
The U.S. economy appears to be slowing. Predictions of continued growth probably rely on assumptions the rest of the world continues to grow. How reasonable is this view?
September 10, 2007
By how much will the Fed cut rates?
Once again we're seeing a big divergence between what the markets expect the Fed to do and what the Fed expects the Fed to do.
September 08, 2007
Just how bad is the labor market?
Nonfarm payroll employment growth is 1.3% (12 month log difference). Civilian employment -- adjusted to conform to the establishment payroll series -- is 1.0%. These are the numbers for August 2007? Almost. Payroll employment growth was actually 1.2%. Those figures are for February 2001, the month immediately preceding the last NBER-defined recession.
Jobs numbers disappoint
Was that the other shoe we just heard drop?
September 06, 2007
Dueling Recession Probability Estimates
Open thread on declining Saudi oil production
An article I wrote on Saudi Arabia's Ghawar oil field appears in the latest issue of Atlantic magazine. I'm putting up this post primarily to provide a forum for readers who might want to offer comments on that discussion.
Borrowing short and lending long
Here I elaborate on the description of the nature of current problems in financial markets that I offered at the Fed's Jackson Hole conference last week.
September 05, 2007
August auto sales
August light-vehicle sales give us an early indication of how the real side of the economy is holding up under the financial turmoil that began August 9. And the results are not too bad, considering.
OECD downgrades growth
The OECD has just released What is the economic outlook for OECD countries? An interim assessment (5th September 2007), which reduces US 2007 y/y growth by 0.2 percentage points relative to what was forecasted five months ago. Yet, in a testament to how fast-moving the situation is, that reduction in growth estimates might have been too conservative (consider today's pending house sales numbers).
September 04, 2007
AWOL on safety regulation and the protectionist surge
Many observers have long worried about protectionist pressures even as the economy operates at full-employment. What, I wonder, will occur when the economy slows appreciably and unemployment increases, against a backdrop where the safety of imports is already at issue? Those of us who believe that a open and free trading regime is preferable to a restrictd trading regime should be concerned.
Another suggestion for the GSEs
George Washington University Professor Richard Green has another suggestion for addressing the market distortions generated by Freddie Mac and Fannie Mae that I mentioned in my comments at Jackson Hole.
September 02, 2007
The Taylor Rule and the housing boom
Stanford Professor John Taylor presented another very interesting paper at the Jackson Fed conference.
September 01, 2007
Comments on Housing and the Monetary Transmission Mechanism
Here are the comments that I delivered this morning at the Fed Jackson Hole conference.
Bernanke and Gramlich on the subprime issue
Also featured yesterday at the Federal Reserve conference in Jackson Hole were speeches by Fed Chair Ben Bernanke and former Fed Governor Edward Gramlich.