Both Europe and the US had debt bubbles which popped. Banks on both sides of the Atlantic do not hold enough capital to cover the losses associated with the poor lending decisions from the previous decade. The folks with 200 LTVs in Las Vegas are no different than Greek or Portuguese taxpayers. Neither are going […]

I have been fortunate enough to speak at a conference out in Las Vegas over St. Patrick's Day and the NCAA tipoff party this week. At the conference we have discussed and debated the global crisis environment for hours on end -but in the bubble that is the rest of Las Vegas one sees and […]

Whether you trade US consumer abs, European bank credit, Aussie government debt or USDMEX there is almost certainly one chart featured prominently on your screen(s) - the S&P 500. In times of unprecedented uncertainty and crisis, correlations always move sharply towards unity. As I tried to emphasize yesterday there is no one who can comfortably […]

While I am not a huge fan of either survey or TIPS based measures of inflation expectations, today's UMich inflation expectations release is going to raise some eyebrows at 20th and C Street in DC!!! The following statement from the Jan 26th FOMC meeting may need a little editing after this data - "The Committee […]

There are many messages in my inbox this morning on the Japanese quake. While I don’t think anyone has successfully been able to grasp the extent of the damage, the size of 8.9 is truly shocking. Such a quake is capable of horrific destruction. We can all only hope that the remote location of the […]

There is plenty to discuss this morning in light of the US data, the Fed testimony and the ECB red alert. First, the US data were strong – claims, the U rate and the employment components of the PMIs all point to a MUCH stronger employment picture for Q1 2011 than virtually every economic forecaster […]

The greatest macroeconomic debate of all time is that between the classics and Keynesians. It was best represented in the 70s, 80s and 90s when one looked at the research from the fresh water schools - Chicago/Rochester/Carnegie-Mellon versus that from the salt water schools - Harvard/MIT/Princeton. If we could put figure heads on each side […]

Today's HH testimony (or whatever it’s called these days) contains some real gems on the Fed's view of how monetary policy really works. First, let’s reread the view of why lowering short term rates is the same as buying long term government bonds- "Large-scale purchases of longer-term securities are a less familiar means of providing […]

As one reads through the Administration white paper on GSE reform a couple of key themes jump out. First and foremost the government's role in housing finance is going to diminish markedly. However, the white paper is somewhat tortured on complete removal of government involvement. The 3 outlined options make it is clear that the […]

We all own one. It has been comfortably tucked away in our back pockets since late 2008. Occasionally we forget it’s there. And back in the fall of 2008, when it was taken away for a brief period of time, global capital markets self-destructed. Of course I’m referring to the ever controversial “Bernanke Put”, which […]