More evidence the latest QE will probably not help the U.S. economy…Comments »
Monthly Archives: September 2012
09/26/2012 The global financial system remains “overly complex” as reforms bog down in the post-recession economic slump, the IMF warned in a report Tuesday.
Subprime Crisis Diagram. Courtesy of Farcaster/CC-BY-SA-3.0
And central banks’ record-low interest rates may be creating future problems by encouraging excessive risk taking, the very behavior that reforms are trying to curb, the International Monetary Fund said in its latest Global Financial Stability Report.
The IMF said that financial systems were little changed five years after the start of the US subprime mortgage crisis that plunged the global economy into recession.
“The data suggest that financial systems are still overly complex… and the too-important-to-fail issues are unresolved,” the IMF report said.”Comments »
“Nearly one quarter of Americans have less than $100 in savings to cover an emergency expense, and many would not turn to family members for a loan, according to findings from a new survey from online lender CashNetUSA.com.
The data also show that a significant percentage of Americans are living paycheck to paycheck.
The survey was conducted in February by TNS Omnibus on behalf of CashNetUSA.com and included responses from a national sample of 1,000 Americans.”Comments »
“The Federal Reserve’s latest mortgage bond purchases so far are helping profit margins at lenders including Wells Fargo & Co. and JPMorgan Chase & Co. more than homebuyers and property owners looking to refinance.
Since the Fed’s Sept. 13 announcement that it would buy $40 billion more securities per month, the rates offered for new 30-year loans have fallen by just 0.11 percentage point, compared with a drop of more than 0.6 percentage point for yields on the bonds into which the loans get packaged, according to data compiled by Bloomberg and Bankrate.com.
The gap between the two, which typically signals increasing lender revenue when it widens, has reached a record of more than 1.6 percentage point.”Comments »
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“A man’s got to know his limitations,” says “Dirty Harry” Callahan, the gun-toting, rule book-ignoring cop immortalized by Clint Eastwood in “Magnum Force.”
It is a principle the U.S. Federal Reserve – which earlier this month embarked upon its own, third bout of “unorthodox” enforcement, “QE3” – could learn from, according to Stephen Jen, the former Morgan Stanley foreign-exchange guru turned hedge fund manager.
“The Fed officials are some of the smartest economists around,” he wrote in his most recent note to clients. The trouble is, said Mr. Jen, “they know everything except their own limitations.”
Barely two weeks on from Ben Bernanke’s announcement of potentially unlimited bond-buying by the Fed, and concerns like those of Mr. Jen are reverberating across the hedge fund industry.”Comments »
“BRUSSELS (Reuters) – Creation of a banking union to help resolve the euro zone debt crisis could lead to a split within the widerEuropean Union, lawmakers in the European Parliament warned during a debate that laid bare the extent of tensions in the bloc.
Brussels proposed earlier this month that the European Central Bank (ECB) take charge of supervising all banks in the euro currency zone, as a first step towards creating a banking union under which euro zone countries would eventually jointly back their lenders.
However, the plan has sparked concerns among the 10 EU countries which do not use the euro that they will be indirectly affected by the ECB’s new supervisory powers and put at a competitive disadvantage, whether they join the scheme or not.”Comments »
“ROME (Reuters) – Italian retail sales fell for the fourth month running in July, data showed on Wednesday, highlighting how austerity measures and unemployment are discouraging shoppers and deepening a year-long recession.
Sales dropped 3.2 percent in July compared to the same month last year, National statistics office ISTAT said, for their steepest fall since a 6.8 percent drop in April, the largest decline since the current data series began in January 2001.”Comments »
“BERLIN (Reuters) – Germany cleared the last legal hurdle to ratifying the euro zone’s new bailout fund on Wednesday with a cabinet declaration that addresses concerns raised by the country’sConstitutional Court.
Germany is the last country in the 17-member euro zone to complete ratification of the European Stability Mechanism (ESM), an important tool to stem the three-year debt crisis that has forced bailouts of Greece, Ireland and Portugal and now threatens big countries like Spain and Italy.
German ratification was held up for months by legal complaints against the ESM. The Constitutional Court finally gave the bailout fund the green light on September 12 but said the government must also meet certain conditions.”Comments »
“The European Central Bank’s bond purchasing program could hinder a recovery in the euro zone if it eases pressure on governments to implement reforms, German Bundesbank President Jens Weidmann said in an interview with Swiss newspaper Neue Zuercher Zeitung.
Weidmann questioned whether bond-purchase programs are the appropriate mechanism for solving structural problems, such as the lack of competitiveness and loss of trust in an individual country’s fiscal policies, according to the interview. Weidmann was the only member of the ECB Governing Council to oppose the so-called Outright Monetary Transactions program.”Comments »