Economics Roundtable
Payroll Employment
The December figure for U.S. payroll employment comes out Friday. The November figure was down over 500,000 jobs. Is a loss of 1,000,000 jobs possible for December?
Charts to watch:
2004-2009
1988-2009
12/31/08 -- The growth in excess reserves has slowed, at least for the past two weeks. Excess reserves have grown to $798 billion, which is an increase of only $24 billion.
12/18/08 -- Excess reserves increased from $590 billion to $774 billion over the past two weeks. Required reserves are now $53 billion. Total reserves equal about 52% of M1.
12/4/08 -- Excess reserves decreased from $605 billion to $590 billion over the past two weeks.
11/20/08 -- Reserves with the Fed increased by $237 billion over the past two weeks. Required reserves are now $48 billion, and total reserves are $653 billion, leaving excess reserves of $605 billion. Reserves are now equal to about 44% of the money stock M1.
August, 2008 -- Excess reserves are $2 billion, a figure that is typical of recent years.
Monetary Policy in Three Steps
Step 1: Buy private assets from banks while selling Treasuries, effectively trading private assets for Treasuries, leaving reserves with the Fed unchanged.
Step 2: Buy private assets from banks, paying with deposits with the Fed (new money) because the portfolio of Treasuries is shrinking. Banks make little attempt to convert deposits with the Fed into loans. Nothing much happens to loans and the money supply, but excess reserves explode.
Step 3: Banks start to expand loans on the basis of massive excess reserves. The Fed has to drain hundreds of billions in excess reserves to regain control of the money supply. The Fed does this by selling private assets back to the banks.
We are now well into Step 2. Step 3 should be interesting.
Why AIG was in the CDS Business
Felix Salmon explains how taxpayers get to pay the claims after AIG collected the premiums. It is really very simple.
VoxEU -- Free Online Book
Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis -- Contents Page
Richard Baldwin, Barry Eichengreen
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Economic Principals
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The First Global Financial Crisis
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Edited by Andrew Felton and Carmen Reinhart
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Review: the topic itself is important, but this book also marks a new direction for online discussion.
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ALERT: The Credit Crisis: How We Got Into the Current Mess and How We Can Get Out
Risk Metrics Group, Fusion IQ, and Roubini Global Economics cordially invite you to join a LIVE web conference on Thursday, October 2nd, 2008 from 5:00 to ...
Just got home from the conference with Nouriel Roubini et. al.
Mad props to Marketbeat for live blogging the entire session (after the jump).
This was a dry run for the next version, which might be 4 people (any names you might like to see/hear? Use comments to ...
Why on earth the FOMC would want to undo any of the work by Treasury with a rate cut? The whole idea of letting Lehman die is to reintroduce the concept of risk and eliminate some of the Moral Hazard fostered by prior bailouts.
The current market bet is ...
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"Las Vegas Sands Says U.S. in a 'Psychological Recession'."
Imagine that: Executives who make their living on Americans' reliably reckless financial decisions are saying that people are too bummed out to gamble.
-Michael Santoli
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Had that been all, then ...
With celebrations set to kick off in Denver for the Democratic National Convention, the JOURNAL travels to Colorado where tough economic times are hitting suburban communities.
PBS and Bill Moyers go to the suburbs of Denver as the ...
Today's guest post comes to us via Macro Man -- a portfolio manager at a London-based hedge fund, he trades global currencies, equities, fixed income, and commodities. Over a long and varied career, Macro Man has been an international economist, a sell-side currency strategist, and a currency options ...
I am otherwise jammed up, so I didn't get a chance to take apart the Housing Starts data -- but damn! if these two charts (via Merrill's David Rosenberg) don't tell the entire story:
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Crude Oil is down to $115 (continuous cash futures contract). We also have some Backwardation -- meaning futures (September contract) versus cash or spot contract.
That’s bad mojo -- Markets are reading this as a positive, but I am less convinced. This looks to me like demand destruction brought on by ...
Investor Marc Faber, publisher of the Gloom, Boom & Doom Report, talks with Bloomberg's Kathleen Hays about the euro's performance against the U.S. dollar, the commodities market and the global economy. The euro fell the most in almost eight years against the dollar as traders pared bets the European Central ...