Daily Archives: November 6, 2009

Krishna Guha

“Low rates of resource utilisation.” That was one of the three factors the Fed has identified as preventing a rate rise for at least six months. With unemployment now at 10.2 per cent, and probably peaking nearer 10.5 per cent, “resource utilisation” is unlikely to be the trigger for an early rate increase. Indeed, if unemployment alone decided interest rate policy, we could see near-zero rates for a very long time: Fed unemployment forecasts are about 8 per cent two years from now. Read more

An increasingly bitter dispute among economists is raging over the accuracy of the preliminary official figures showing a 0.4 per cent economic contraction in the third quarter. But a spirited defence of the official figures from Danny Gabay of Fathom Consulting is seriously flawed writes Chris Giles of the Financial Times. The logic of his view is that the benefit of hindsight is strictly time-limited.
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Too-big-to-fail policies are giving banks the wrong incentive, namely to grow very big, very quickly. Clearing houses can collapse as well as banks, and Sri Lanka joins the rush for gold. Read more

Ralph Atkins

An aside from Mr Trichet leads Ralph to wonder how the ECB is planning to price its December one-year liquidity offering – there is plenty of scope for the Bank to send the wrong signals Read more

Economics news headlines from around the web Read more

Economics headlines from the FT Read more