Monday, 24-03-08 01:27

Here's are the answers:

1. www.eurointelligence.com/article2.962+M5430500a72b.0.html
"A 50% real fall in house prices is so much easier to stomach if annual inflation runs at 8% than at 2%."

2.
The USA has taken lawns from other countries,
in its own currency - the USD.

Friday, 14-03-08 09:30

Very interesting !

But the question is: why do central bankers (who are supposed to be independant)leave out basic figures ? What's the motivation behind this, who is responsible and where are the missleading dependencies ?

J. Diekmann

Friday, 14-03-08 06:57

So have you gotten any response from the folks at the FED about your observations as described in this article?

Thursday, 13-03-08 08:44

It is folly to urge the banks to borrow short and lend long. The yield curve contains a forecast of implied future short rates. Absent a term premium in long rates, the money banks make on mismatching maturities will be lost on refinancing their shorter assets. And we now know that the term premium is falling, in part because of heightened demand by pension funds for longer assets. Given the potential for higher inflation, banks that short fund could easily end up losing money, as future short rates outstrip the term premium and create negative carries.

Tuesday, 19-02-08 10:02

I fully agree with Paul's view point. The mindless rate cuts initiated by the fed also has serious adverse global ramifications, specially for the emerging markets which are continuing to see large dollar flows and playing havoc with their financial markets. The vulnerability faced by global financial institutions is leading to unstability of financial systems across the world and is potentially far more ominous than market instability. The coupling arguments will flow more rapidly through financial linkages, which is likely to be much quicker than real sector linkages.
The biggest paradox in my view is Fed's current focus on the financial markets which seems to be dominating its decision making. Concerns on price stability has been played down.
This is contrary to the much avowed stance that Fed's decisions should not be influenced by the asset market behaviors. Earlier, Bernanke has been one of the biggest proponents of this view. One wonders why there has been a change in stance on him becoming the chairman. Perhaps, Paul’s article has helped understand the compulsions of being in the hot seat.
regards,
Dhananjay Sinha