Bank or no bank?
In a market economy, when you need something, you go out and buy it. Liquidity is no different, in that respect at least. If it is market liquidity that you need, you go to a dealer, who stands ready...
View ArticleBank or no bank?
In a market economy, when you need something, you go out and buy it. Liquidity is no different, in that respect at least. If it is market liquidity that you need, you go to a dealer, who stands ready...
View ArticleFed, ECB balance sheet update
Perry and I extend our apologies for the unplanned hiatus. By way of breaking radio silence, it seems appropriate to check in on our two favorite banks. Here's the Fed's balance sheet, asset side...
View ArticleCrisis Averted: Understanding LTRO2
Fundamentally, the ECB is trying to keep the ongoing sovereign debt crisis from turning into a full-fledged bank credit crisis. Three things they are worried about (see here, here, here).read more...
View ArticleLiquidity: Not Like Water (part 1 of many)
Discussion of the results of the ECB's LTRO2 has revolved around the question of hoarding, specifically whether banks are using the newly-created reserves to fund new lending. Answers to this question...
View ArticleEurocrisis Redux
Entangling alliances or entangling leagues are nothing to the entanglements of cash owing--Keynesread more...
View ArticleRenminbi swap lines
Last week the central banks of China and Australia announced the creation of a $31bn currency swap line. Like every such agreement, it was hailed as another step towards the renminbi's displacement of...
View ArticleWorld Without Money Reconsidered
FT Alphaville has picked up on my friend James Sweeney's latest, and since James cites the latest writings by other friends Zoltan Pozsar, Manmohan Singh, as well as my own most recent, the piece reads...
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Banks as creators of money
In conversation recently, I was called upon to defend the claim that banks are in the business of creating and destroying private money. This has been for me a working hypothesis for so long that I was...
View ArticleInsights from Bagehot, for these Trying Times
Here is a talk I gave recently at Wake Forest University. It is pretty long, but you can page through the video (on the left) by paging through the powerpoint (on the right), and anyway the last...
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Swexit
Since September 2011, the Swiss National Bank has held a floor of 1.20 francs per euro. This floor has in practice been a peg, as the pressure has been in only one direction, downward (that is, in the...
View ArticleLethal Embrace? A Thought Experiment
At the heart of the Eurocrisis lies a vicious circle where once there was a virtuous one. Over the last week or two, the FT has been reflecting on the connection between the sovereign debt crisis and...
View ArticleThe fix was in
In Friday's FT, former Morgan Stanley trader Douglas Keenan traces banks' LIBOR manipulations back to 1991, when he observed, from the futures desk, LIBOR fixings come in at levels different from where...
View ArticleQE3
Last Thursday, the Fed announced its anticipated third round of balance-sheet expansion, at a fixed rate of about $40B per month "until [substantial] improvement [in unemployment] is achieved in a...
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Liquidity, Down the Drain
China released quarterly GDP figures this week. Wen Jiabao emphasized the parts of the release that pointed toward stabilization, and one can certainly find some logic to that view. Stabilized or not,...
View ArticleOMT: Slouching toward Eurobills?
The Eurocrisis has many dimensions—bank solvency crisis, sovereign debt crisis, political unity crisis, and economic/unemployment crisis—but time after time it has been the liquidity crisis dimension...
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