10 Updates

Taper II and Goodbye Mr. Bernanke

Jan 29 2014, 3:09pm CST | by

While I wasn’t surprised that the FOMC accelerated their taper today , I wouldn’t have been surprised had they hit the pause button this time. The December jobs report plus other recent weaknesses...

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25 weeks ago

Taper II and Goodbye Mr. Bernanke

Jan 29 2014, 3:09pm CST | by

While I wasn’t surprised that the FOMC accelerated their taper today , I wouldn’t have been surprised had they hit the pause button this time. The December jobs report plus other recent weaknesses in the data had provided sufficient cover to pause. That they did not do so suggests that they really wanted out, which is quite a contrast to their apparent attitude just a few months ago. They’ve gone from looking for an excuse to continue to looking for an excuse to taper.

It was time. I’m not one of those who thought all the QE was a mistake despite having to rely on counterfactuals to justify it. But, if it was helping the economy to grow faster and create jobs faster, then it surely had hit diminishing returns.

I’m glad we had two months of taper decisions under Chairman Bernanke’s watch. He can leave now with the assurance that he didn’t go a bridge too far. The new Chairman will find it more difficult to reverse course.

I sat next to Ben Bernanke at the FOMC table when he served his first term as Fed Governor. And, while pleasant and smart, he never struck me as a fine Chairman in the making. That shows how much I knew. Or, perhaps, as so often happens, the job made the man rather than the other way around. I retired in November 2004, but one can’t help wondering at each well-publicized FOMC meeting how one would have voted had he been there. That wasn’t hard. What was hard was, in late 2007 and throughout 2008, wondering what in the world I would do if I were chairman. I couldn’t imagine. They were in unchartered territory and the new Chairman more than rose to the occasion.

Watching events play out from the sidelines was interesting but frustrating. In the early stages of the financial crisis, I couldn’t believe how the main players stood by and watched mark to market accounting rules, which never should have been applied to banks, destroy so much bank capital unnecessarily and cause so many bank failures.

Also frustrating was all the talk about moral hazard when the world seemed to be falling apart. Apparently, we were supposed to let the world implode this time to reduce the effects of moral hazard next time. No one seemed to notice the irony when almost overnight—after Lehman failed—how the narrative changed from “let ‘em fail” to “letting Lehman fail was their worst mistake.”

As the Fed’s balance sheet grew through the excess reserves of the banking system came calls for the Fed to sell securities to “mop up” the excess reserves. After all they weren’t necessary today and they could feed inflation later. Thankfully, the Chairman had been enough of a student of the Great Depression to realize he was being asked to repeat the Fed’s great mistake in that regard then. On two separate occasions in the mid-1930s, the Fed raised reserve requirements to mop up those excess reserves. Of course they turned out not to be excess in the minds of the bankers who were being beaten about the head and shoulders.

Another interesting irony to watch unfold was the attitude toward quantitative easing expressed daily on financial TV. The guests on financial shows were overwhelmingly against it until it began to dawn on them that it was supporting the stock market so much. Then the worries went from being against QE on principle to dreading even a small taper in the pace of QE.

It was sad for me to see the Libertarian candidate for President draw almost the entire presidential field into being anti-Fed and anti-Bernanke. At least he based it on his reading of Austrian economics. I’m not sure about the rest of them—just their reading of the polls I reckon.

Anyway, I personally believe that Chairman Bernanke did a fine job, and I wish him well.

Source: Forbes Business

 
Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Ra ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

6 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

Newcastle United Training Session
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robber ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

Federal Aviation Administration Bans All US Flights To Israel
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rak ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin Hussei ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

6 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

6 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of R ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan B ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) tod ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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