It’s A Wonderful Theory

Scott Sumner:

It makes no difference who gets the extra money from the Fed, because the recipient is no wealthier than before (money is swapped for bonds) and hence they have no incentive to spend any more.  Rather the impact occurs in the AGGREGATE.  Total holdings of the base now exceed total base demand . . . → Read More: It’s A Wonderful Theory

Interesting Readings for August 21, 2012

Ila Patnaik in the Indian Express on the role of the Ministry of Finance in India’s growth. Pratap Bhanu Mehta in the Indian Express on India’s cabinet reshuffle. Anil Padmanabhan in the Mint about how things have changed at MoF after Chidambaram got back.

Bibek Debroy on a major problem that afflicts India today: . . . → Read More: Interesting Readings for August 21, 2012

Loans Aren’t the Solution

Apparently microcredit has not lived up to its hype:

There has been enough time and evidence now to explore the full impact of microcredit in depth, and, set against its vaunted reputation, my verdict is dour: Microcredit rarely transforms lives. Some people do better after getting a small business loan, while some do worse . . . → Read More: Loans Aren’t the Solution

Catch Up

Been stockpiling the following for comment:

Silver shortage vs coin shortage

I’ve been on this issue for a long time, now I have backup from David Morgan: In 2008 there was no shortage of all silver per se, but there was a shortage of coins, bars and other retail “investment” items. The evidence: Much . . . → Read More: Catch Up

The Morality of Walking Away

There appears to be a misunderstanding:

Now, with the property worth roughly $60,000 less than the balance of their mortgage, Martin, 68, has been giving serious thought to just walking away, a process lenders call “strategic default.”

“Guilt and morality are one side, and objective financial analysis are on the other side,” Martin said. . . . → Read More: The Morality of Walking Away

ECB/Fed Support for the European Banking System - 750 billion USD, and counting ...

One point that I have been shouting from the proverbial roof tops in my research, to partners and colleagues is that 2012 may well be the year when all major central banks will be conducting both conventional and unconventional monetary easing at the same time. I think this is a very strong testament not . . . → Read More: ECB/Fed Support for the European Banking System – 750 billion USD, and counting …

Cleveburgh Watch: A Tale of Two Banks

So to admit upfront, this is all parasitic on some neat reporting from Bloomberg out on the Analytic Journalism frontier.  They have acquired and made available to the public (which means they want us to use it right?) data as they describe “Once secret ” from the Federal Reserve on its lending to major . . . → Read More: Cleveburgh Watch: A Tale of Two Banks

Negative Gold Lease Rates (again)

If Tom from Metal Augmentor keeps on putting out great stuff like this post on negative lease rates, then I’ll be out of a (blogging) job.

It is heavy going but a comprehensive discussion of the issue with a dramatic speculation that “The selective collateral nature of the tri-party format may force bullion banks . . . → Read More: Negative Gold Lease Rates (again)

MF Global and HSBC case

As usual, Zero Hedge and others hype a story way beyond the reality (see here for the Bloomberg story), such as: ZH: ”is whether or not MF Global was rehypothecating (there is that word again), or lending, or repoing, or whatever you want to call it, that one physical asset that it should not have been . . . → Read More: MF Global and HSBC case

Negative Lease Rates

Very good two page analysis of negative lease rates by Pollitt & Co’s John Paul Koning, including central bank activity in this market. Quote:

What sort of “non-banks” might be supplying leased gold to the market-making banks at these extremely negative rates? As we already pointed out, central banks seem willing to lend only . . . → Read More: Negative Lease Rates