Monetary policy

I think the aspect of this I find the most amusing in this article is the suggestion from President Hollande that the penalty would “…[introduce] a risk, doubts, suspicions about the soundness of Europe’s financial system…” This seems to suggest that we do not already have doubts and suspicions about the risks and soundness of the European financial system. You broke the rules, and you pay the price. The move to make companies admit guilt is a new approach, and a welcome one. This forces banks to really address what their policies are and face the consequences.

Continue reading Doing the French Mistake

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This is something of a non-news item (article). Three Republicans on the banking committee supported her making it very likely there would be 60 votes for her in the Senate which would negate any procedural moves to delay her appointment. Fed policy is entering a transition period as extraordinary policy measures such as asset purchases are in line for phase out. The timing of these events is very important because, unfortunately, financial markets depend on these measures right now. Fed purchases are supporting prices and keeping yields low, impacting individual asset allocation decisions. When the interventions end we will see changes in yields, and therefore changes in those asset allocation decisions. As a result you will see increased volatility in financial markets, which matters for individual retirements, college savings and so on.

Continue reading Yellen Nomination Moves Forward

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The grilling of Janet Yellen as the nominee to be the next Fed Chair is sure to raise some interesting fodder. I will comment as appropriate but I have a presentation on Friday so it may take some time for me to get the posts up. I will suggest the following though: the nomination of Yellen is a status quo pick. She is an insider and has been present through the QE policies and so understands the rationale behind current Fed policy. This makes here unlikely to undertake drastic immediate change. This is in contrast to a Summers nomination. Summers ego was likely to get in the way and he would need to change policy simply to put his stamp on events.

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