Archive for November, 2016

Print section
Print Rubric: 

A veteran of the financial crisis says banks need much more capital

Print Headline: 

Kash call

Print Fly Title: 

Banks and “too big to fail”

UK Only Article: 
standard article

Issue: 

The new nationalism

Fly Title: 

Banks and “too big to fail”

Location: 

NEW YORK

Main image: 

20161119_fnp004.jpg

SINCE Donald Trump won the election, American bank shares have surged on traders’ hopes of a bonfire of financial regulations. So a proposal from Neel Kashkari, head of the Minneapolis Federal Reserve, vastly to increase capital requirements looks ill-timed. On the other hand, the plan mimics the direction—if not the extent—of one backed by congressional Republicans.
Mr Kashkari is an experienced financial firefighter. An alumnus of Goldman Sachs, best-connected of investment …

via Economic Crisis http://ift.tt/2f8auvY

Advertisements

Main image: 

AFTER the Brexit referendum and the election of Donald Trump, and the subsequent market reactions, I think we are closing in on a decent theory of the way liquidity traps end.That might be going too far. Markets have not had that much time to process the American election outcome, and what time they have had has sent some mixed signals. Yet among the clearest market moves since the morning of November 9th has been a sharp drop in Treasury prices, accompanied by a sharp rise in implied inflation expectations as determined from inflation-protected Treasury securities. Now: sharp is relative. But markets are showing signs of that they expect reflation under Mr Trump. And they have reason to. Mr Trump seems keen on massive tax cuts and a big increase in government spending (on defence, and perhaps also on infrastructure). Mr Trump might just represent macroeconomic regime change.Let's back up. The theory of liquidity traps first began to develop in the 1930s, when John Hicks picked up where John Maynard Keynes left off, in response to events of the Depression. Keynes explained that when an economy was operating at less than full employment, then a rise in government borrowing could generate a large boost in employment for a small rise in interest rates; rather than crowding out private …

via Economic Crisis http://www.economist.com/blogs/freeexchange/2016/11/slumponomics?fsrc=rss

The high cost of child care is a strain for many families in the U.S., yet child care workers average less than $10 an hour. This strain on workers hurts babies and toddlers, too, researchers say.

via Economy : NPR http://ift.tt/2eeKbWj

Scott Paul and Gerald Taylor of the Alliance for American Manufacturing discuss a report on how manufacturing decline in the U.S. has left many African-American communities spiraling toward poverty.

via Economy : NPR http://ift.tt/2foPulR

The vision: Microloans will let women start their own businesses. What do the studies show?

via Economy : NPR http://ift.tt/2eYBE6o

Main image: 

With the Federal Reserve set to raise interest rates in December, my colleague R.A. argues that:Fed members argue that they are choosing to raise rates now, before inflation has returned to target, so that inflation will not jump above 2%, forcing them to raise rates in a much more rapid manner. If the choice is between above target inflation and a recession, the Fed will take the latter. They are prepared to risk keeping inflation from ever getting to target in the first place (and also a recession) by raising rates with inflation below 2%…and that…recent experience has probably distorted central bankers' perspective, and made them excessively quick to see inflation in the data and react to it

His criticism of the Fed combines multiple lines of argument. One is that central bankers are too keen to spot inflation in the data. That is probably right. Much has been made of a recent pick-up in core inflation. But it is not all that impressive. Prices excluding food and energy—the “core” measure that the Fed really cares about—are about 1.7% higher than a year ago. But when measured on a rolling three-monthly basis, inflation has been falling since the spring (see chart). The consumer price index, an alternative yardstick, tells a similar story. With inflation both below target and …

via Economic Crisis http://ift.tt/2eQgwBE