tagged w/ fed
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Según el experto de MetAnálisis, las referencias económicas del país vecino refuerzan la posición del peso mexicano.Según el experto de MetAnálisis, las referencias económicas del... more
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Según el analista de MetAnálisis, la moneda mexicana ha alcanzado objetivo de apreciación en 11,70 que advierten riesgos de sobrevaluación para el peso.Según el analista de MetAnálisis, la moneda mexicana ha alcanzado... more
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Comenzamos la versión light de la relajación cuantitativa 3 por cortesía de Japón, mientras que el BCE realizó la primera de una posible serie de subidas de tasas de interés.Comenzamos la versión light de la relajación cuantitativa 3 por... more
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El IPC de México sigue consolidando el alza de algunas emisoras. Más adelante se producirán nuevos avances apoyados en datos económicos positivos,El IPC de México sigue consolidando el alza de algunas emisoras. Más... more
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La moneda mexicana se acerca a niveles de sobrevaloración que darán oportunidad a que remonte el dólar a 11,92.La moneda mexicana se acerca a niveles de sobrevaloración que darán... more
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El cruce euro-dólar podría estar preparando un movimiento de subida hasta 1,4500, tras romper la resistencia de 1,4250.El cruce euro-dólar podría estar preparando un movimiento de subida... more
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El futuro de la eurozona sigue pendiente de la economía alemana que continúa aportando datos sólidos. Podrían subir las tasas en la reunión del BCE de mañana.El futuro de la eurozona sigue pendiente de la economía alemana que... more
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La híper-inflación no sería una amenaza para el sistema a pesar de las perspectivas negativas sobre la inflación, que pondrá a prueba a los consumidores y presionará los márgenes de las empresas.La híper-inflación no sería una amenaza para el sistema a pesar... more
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Las actas de la última reunión del FOMC podrían dar una pequeña concesión a los inversores estadounidenses. También se esperan datos del ISM No manufacturero.Las actas de la última reunión del FOMC podrían dar una... more
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Miembros de la Reserva Federal se pronunciaron a favor de la extensión de la relajación cuantitativa y un posible aumento de tasas.Los comentarios fortalecieron a la divisa estadounidense.Miembros de la Reserva Federal se pronunciaron a favor de la extensión de la... more
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En este típico período de bajas, el balance del tercer trimestre sigue siendo favorable. Una tercera relajación cuantitativa propone un nuevo escenario.En este típico período de bajas, el balance del tercer trimestre sigue... more
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Here’s a little secret the Federal Reserve Board doesn’t want you to know. On Sept. 24, 2008, while financial markets were collapsing, Morgan Stanley borrowed $3.5 billion through the Fed’s oldest lending program, the 98-year- old discount window.
The Fed has long claimed that releasing this type of data could trigger bank runs, public hysteria, death spirals at financial institutions large and small, and other horrible outcomes. Yet I’ve got a hunch Morgan Stanley somehow will survive this revelation. Mass panic will not ensue. The world will not end.
This is the kind of information the late Bloomberg News reporter Mark Pittman was seeking when he filed a Freedom of Information Act request with the Fed in May 2008, nine months after the financial crisis began. Among other things, he asked for documents showing which banks had borrowed money under the Fed’s emergency-lending programs and the details of those loans.
The Fed blew off his request. Bloomberg LP, the parent of Bloomberg News, responded by suing the central bank. The company won both at the district court level and on appeal. This week, the Supreme Court decided to let those rulings stand. And so almost three years after Pittman sent his original FOIA letter, the Fed finally will have to comply with the law.
Fox News is pressing a similar request concerning Fed loans from August 2007 to November 2008. Much of the information the two companies sought has been disclosed already. The Dodd-Frank Act, which President Barack Obama signed last July, forced the Fed to release details of many of its bailout programs. Still, the Fed has yet to divulge which banks borrowed through its discount-window program. It won’t be long now, though.
Stigma Avoidance
The discount window functions as a lifesaver through which qualifying borrowers can secure emergency liquidity during times of severe stress. Historically the Fed had kept the names of borrowers confidential on the grounds that disclosure could stigmatize them in the public’s eyes, even though it was the public’s money the Fed was lending.
As it turns out, the information about Morgan Stanley (MS)’s $3.5 billion discount-window loan has been sitting on the Financial Crisis Inquiry Commission’s website since last month. The panel didn’t mention it in its final report. And nobody had written a story about it before. (link to spreadsheet at my site)
The loan came three days after Morgan Stanley said it had received Fed approval to become a bank holding company, giving it access to the discount window for the first time.
A Morgan Stanley spokesman, Mark Lake, confirmed that my reading of the spreadsheet is correct. The bank had stamped the document “confidential treatment requested” when it handed it over to the crisis commission. The panel released it anyway, apparently seeing no harm.
The Fed’s arguments for keeping this sort of data secret were transparently bogus. One Fed economist, Brian Madigan, said in an affidavit that disclosing discount-window borrowers’ names “can quickly place an institution in a weakened condition vis- a-vis its competitors by causing a loss of public confidence in the institution, a sudden outflow of deposits (a ‘run’), a loss of confidence by market analysts, a drop in the institution’s stock price, and a withdrawal of market sources of liquidity.”
‘Inherent Risk’
U.S. District Judge Loretta Preska in Manhattan rejected that line of reasoning as bunk.
“The risk of looking weak to competitors and shareholders is an inherent risk of market participation,” she wrote in her August 2009 decision ordering the Fed to release the documents. “Information tending to increase that risk does not make the information privileged or confidential.” The Second Circuit Court of Appeals in New York upheld her ruling.
Still, the banking industry kept fighting. Identifying banks that tapped the discount window during the credit crisis would be harmful even years after the fact, the Clearing House Association, representing the largest U.S. commercial banks, wrote in an October 2010 petition asking the Supreme Court to intervene. Disclosure would let the public “observe their borrowing patterns during the recent financial crisis and draw inferences -- whether justified or not -- about their current financial conditions,” it said.
New Requirements
They’ll just have to get used to that, though. Under Dodd- Frank, the Fed will be required to publish details of its discount-window loans, including borrowers’ identities, after two years. That’s why the Obama administration stepped in last year and urged the high court not to take up the case, saying the new disclosure rules made an appeal by the Fed unnecessary.
This whole sorry exercise by the Fed has shown the central bank at its worst. The Fed lost on the merits. Yet it succeeded in serving notice that anyone who challenges its judgments must be prepared to spend absurd amounts of time and money on litigation as the price for busting its wall of secrecy and holding its leaders accountable.
Most citizens, and news organizations, would be deterred by such tactics. Mark Pittman, who died on Nov. 25, 2009, must be smiling.
(Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.) (now compare these two stories and you'll see the reason i posted together into one shabang the first part is one author this below is another sources at my link )
Morgan Stanley's Liquidity Pool
Posted by Economics of Contempt at 2:07 PM It’s now official: the week of September 15, 2008 was a really bad week to work in Morgan Stanley’s prime brokerage. And the next week wasn’t so hot either. Various internal documents released with the FCIC report provide a fairly detailed picture of Morgan Stanley’s liquidity position during the crisis, and it’s not pretty. Prime brokers like Morgan Stanley relied heavily on customer cash held in prime brokerage accounts (known as “free credits”) to fund themselves. So when hedge funds all pulled their cash from Morgan Stanley’s prime brokerage after Lehman failed, that had a direct effect on Morgan Stanley’s liquidity pool.
On one day alone (Wednesday, September 17th), Morgan Stanley’s prime brokerage lost $36.6 billion in free credits. That’s $36.6 billion instantly gone from the firm’s liquidity pool. To add insult to injury, that same day, prime brokerage customers also withdrew $12.3 billion of excess margin, which dealers also count toward their liquidity pool. For the week, Morgan Stanley’s prime brokerage lost an amazing $86.5 billion in liquidity. And the next week, they suffered an additional $43.3 billion of outflows, for a two-week total of $129.8 billion. That’s a hell of a fortnight!
Overall, Morgan Stanley’s liquidity pool was falling by tens of billions per day — the firm was basically imploding. Without the government bailout, it’s pretty clear that they wouldn’t have lasted another week.
Unfortunately, I had to pull the stats on Morgan Stanley’s liquidity pool from the internal documents posted on the FCIC’s website, because the FCIC absolutely mangled the liquidity pool numbers in the actual report. They constantly confuse the parent company’s liquidity pool with the firm’s overall liquid assets, which are two completely different measures. — which, given the prominent role liquidity management played in the financial crisis, is pretty sad.
crossposted via: Economics of Contempt a finance Lawyer who specializes in Derivitives link at figrd or http://economicsofcontempt.blogspot.comHere’s a little secret the Federal Reserve Board doesn’t want you to know.... more
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Según el experto de Saxo Bank, uno de los efectos negativos a mediano o largo plazo de lo que ocurre en Medio Oriente, el Norte de África y Japón, es el aumento de la incertidumbre sobre el suministro de energía mundial.Según el experto de Saxo Bank, uno de los efectos negativos a mediano o largo... more
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One thing I have never understood in America is the way that people who lose their jobs become pariahs in the job market. We’ve now had a spate of commentary on the fact that official unemployment figures are looking a tad less dreadful by dint of the fact that increasing numbers of the long term unemployed have dropped out of the job market entirely. Even the conservative Washington Post woke up last week, Rip Van Winkle like, to take note of the growing number of long-term unemployed. Bizarrely, or perhaps as a fit illustration of the spirit of the day, the article was titled: “Hidden workforce challenges domestic economic recovery.” In other words, they are Bad People because if the economy ever picks up, they might come out of the woodwork and start looking for jobs!
Many pundits, such as Paul Krugman in his latest New York Times op-ed, have decried the lack of anything remotely resembling adequate responses to the unemployment problem, particularly that of the long-term unemployed. Ronald Reagan, hero of the right, was concerned when unemployment rose over 8% and took a series of corrective measures, including the Plaza Accord, which was a G-5 currency intervention to drive up the value of the yen. So why do we have a nominally Democratic president sitting on his hands in the face of much worse unemployment?
I’d argue that the roots lie in a fundamental change in policy that took place around 1980. The lesson that economists drew from the stagflation of the 1970s was that labor had too much bargaining power. The excessive fiscal stimulus of the later 1960s and the oil price shocks of the 1970s had been amplified by the fact that workers had enough clout to demand and get wage increases when they faces sustained price increases. That of course led to more price increases since higher wages led to higher production costs which led business owners to increase prices of their goods and servicer, thus accelerating the inflation already under way.
The solution, per neoclassical economists, was to use unemployment to keep wage demands in check. Thus having a lower level of employment even in good times and taking other measures, like weakening unions, was key to keeping those pesky workers from ever serving to create a reinforcing inflationary dynamic.
As an aside, there were other convenient (to the capital-owning classes) side effects of this policy. Before, there had been an explicit agreement between unions and employers embodied in the so-called Treaty of Detroit, which was that workers were to share in productivity gains. President Kennedy even warned major corporations that if they did not adhere to this understanding, he’d push through legislation to make sure they did. Since wage growth and productivity growth marched in near lockstep from 1950 to just after 1980, it appears white collar worker benefited from blue collar bargaining successes.
Mike Konczal points to a recent paper by Daniel J.B. Mitchell and Christopher L. Erickson that goes through twenty years of Fed transcripts. The Fed was clearly obsessed with unions; it saw them as actively bargaining for higher wages, which in a central bank that kept fighting the last war of runaway inflation, was to be discouraged. And let us not forget that that viewpoint turned traditional growth models on their head: rising worked incomes had been seen as the driver of prosperity.
Yet as much as I’d love to take a few more notches out of Greenspan’s reputation, I’m not a believer that the non-existent growth in real worker wages can be laid at this feet. Both the wage stagnation and the cessation of workers sharing in productivity gains dates started before Greenspan took the helm. As much as he has been sanctified for breaking the back of inflation (and putting banks through a lot of pain to do so), he was also explicit about seeing weaker worker wages as a sign of success (he carried a card in his pocket in which he was logging construction worker wages; he wanted to see them fall before he was prepared to declare victory). The Volcker Fed was no friend to the ordinary worker; Volcker was simply willing to put the banks through a lot of short term pain for their own long-term benefit.
Konczal asks for falsifiable hypotheses on this idea that the Fed was a big culprit in the fallen standing of labor. I don’t think they can be constructed, since monetary policy is a blunt instrument, and even though Greenspan began to break with the Fed’s traditional stance re independence, he was not an active player in the Administration’s policy setting. Moreover, the Greenspan put, which took hold in the 1990s (starting with the derivatives wipeout of 1994-5) meant if anything that Fed policy was overly loose.
The reason that that didn’t lead to firmer employment, as former Fed economist Richard Alford argues, was inattention to persistent trade deficits, and that was due to policy measures outside the Fed’s purview. The Fed failed to factor that in fully due to its reliance on macro models that assumed any trade deficits were transitory and hence could be ignored. But older-school economists would have recognized that sustained trade deficits meant that US stimulus, including monetary policy measures, would leak into foreign demand.
I think there have been significant second-order effects as a result of a restructuring of the American workplace by employer who like to claim that “employees are our most important asset”: but really treat them as expenses to be minimized, ruthlessly. One is the way unemployment quickly becomes a barrier to getting a job again. There has always been bit of a stigma surrounding unemployment, since the concern is that the individual lost his job for performance reasons, as opposed to bad luck (his company being acquired, say).
But I’ve seen the bias become far more ingrained over time, reinforced and rationalized by the bizarre way that companies now spec jobs. Whereas in the stone ages they’d hire a competent-seeming individual with some relevant experience, they now look for people who have done exactly the same job at a similar company. This overly narrow hiring spec then leads to absurd, widespread complaint that companies can’t find people with the right skills. That’s bunk. As Dean Baker has pointed out repeatedly, it means they need to pay more, or as I’d suggest, they need to broaden their horizon a tad. The idea that people need a lot of costly training is in most cases grossly exaggerated, a convenient “whocoulddanode” for manager who are quick to fire people and then discover when they want to gear back up that there are costs of brining new workers on, no matter how hard they try to minimize them.
This bias against those out of work is long-standing, although it has gotten worse over time. Talented people over 40 who have lost a corporate perch are pretty much unemployable; I cannot tell you over the last 15 years how many people I’ve seen retire early (and at a modest standard of living) who’d much rather be working. They are the high class version of this problem. And from what I can tell, a significant portion of new business formation is out of necessity: people who cannot find a job setting up their own single instead.
So this “skills” meme is basically an excuse for bad policy and lazy management. It allows for the rationalization of outcomes that would have been seen as unacceptable in the Reagan era. And it’s hard to pin this development on the Fed. This weakening of the position of workers is the result of both deliberate action and misguided economics frameworks. It’s time to take aim at the ideology, not just some of its key followers(more at link &sources)One thing I have never understood in America is the way that people who lose their... more
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Crece la expectativa en los mercados tras el posible cambio de discurso de la Reserva Federal respecto a la inflación de los EE.UU. Además, los inversores deberán prestarle atención tanto a las materias primas como a los vaivenes del precio del crudo.Crece la expectativa en los mercados tras el posible cambio de discurso de la Reserva... more
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La idea de que el Banco de Japón podría estar ofertando instrumentos de deuda ha puesto presión en el mercado, y ésta es una de las razones por las que los rendimientos se han elevado.La idea de que el Banco de Japón podría estar ofertando instrumentos de... more
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Más del 20% de los costos productivos de los commodities agrícolas están relacionados directa o indirectamente con el petróleo, por lo tanto, de continuar las presiones sobre el precio del crudo impulsarán al alza a los precios de los alimentos.Más del 20% de los costos productivos de los commodities agrícolas... more
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Los conflictos en el Medio Oriente y el miedo de que altos precios del petróleo limiten el crecimiento de la economía global impulsan a los bonos del tesoro de los Estados Unidos.Los conflictos en el Medio Oriente y el miedo de que altos precios del petróleo... more
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El mercado laboral de los Estados Unidos mejora modestamente. De acuerdo con el reporte Beige Book, algunos distritos informaron inserciones laborales más estables, mientras que en otros se notó una preferencia por la contratación de trabajadores temporales.El mercado laboral de los Estados Unidos mejora modestamente. De acuerdo con el... more
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