Legitimising the Bolivar’s black market
The mixed reaction to Venezuela’s currency devaluation continues, with investors and ratings agencies cheering the move, and Venezuelans concerned the move will exacerbate already steep inflation.
But one move likely to cheer Venezuelans – at least those with enough dough to buy bucks – Venezuela today started issuing dollar denominated bonds at a rate of 4.3 bolivars, the new exchange rate for non-essentials. Read more
Bank levy to fall on uninsured liabilities
The new US bank levy will fall on uninsured debt – ie assets minus insured deposits minus equity. That makes a lot of sense.
Banks paid a premium to insure the insured deposits – these liabilities were always supposed to be insured against loss by the government via the FDIC. Read more
Modest Beige book improvements
The Federal Reserve’s “Beige Book”, an aggregation of anecdotal evidence of economic activity in the 12 districts, showed ten of them reporting an improvements, compared with eight in the last report.
But, no big surprise, the improvements are typically modest. Holiday spending was up in 2009, but still well below 2007 levels. Labour markets were still “generally weak,” though some hiring was reporting in a few districts. “Modest” wage increases were seen in only a few districts.
Among the interesting items: Read more
Jamie Dimon prize for crisis candour
If I heard him right, Jamie Dimon, the head of JP Morgan, just told the Congressional inquiry into the financial crisis that in the pre-crisis years his firm never stress tested what might happen if there was a big fall in house prices. Remarkable.
Dimon is a tough risk manager and JPM came through the crisis in relatively good shape. Heaven knows what the others failed to consider.
Now everyone is stress-testing like crazy. But how long will this private sector discipline last? Read more
The UK recession appears over
Britain’s recession ended towards the end of last year. So said the National Institute of Economic and Social Research, a few minutes ago. In fact, the respected think-tank believes the trough of output was rather earlier in August and the economy has grown 1.6 per cent between August and December, not bad.
NIESR’s estimates are based on the industrial production numbers and, with the notable exception of the third quarter, are usually very accurate in front-running the official preliminary estimate of GDP. They suggest the official figures will show 0.3 per cent growth in the final quarter.
So if Britain has been out of recession for nearly half a year, what does this imply for monetary and fiscal policy? Read more
German gloom
A wintry gloom has spread across Germany this morning. I’ve just got back from snowy Wiesbaden - half an hour by Autobahn from Frankfurt - where the country’s statistical office was briefing on 2009′s gross domestic product. Strangely, it produces full-year results before giving a fourth quarter number, but officials there said they believe growth stagnated in the final three months of 2009.
That took economists by surprise, if only because forward looking business optimism surveys have pointed to further growth (building on the third quarter’s 0.7 per cent rise). Read more
In short, no. The new proposal would shift some responsibility for bankers’ risk-taking onto bank management. And that idea is bang on time.
Banks offering big bonuses for high risk trading would have to pay more to insure deposits, under a proposal passed by a US regulator yesterday. Banks with more cautious pay policies, such as bonus clawbacks, would pay less. Read more
| About this blog | Blog guide |
Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS
Michael Steen, Frankfurt bureau chief, covers the ECB and the eurozone's economies. He joined the Financial Times in 2007 as Amsterdam correspondent and later worked as a front page news editor in London. Before joining the FT, he spent nine years as a correspondent at Reuters, mostly in foreign postings that included a previous stint in Frankfurt, as well as Moscow, Kiev and central Asia. He read German and Russian at Cambridge.RSS
Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS
Ralph Atkins, capital markets editor, has been writing for the Financial Times for more than 20 years following an economics degree from Cambridge. From 2004 to 2012, Ralph was Frankfurt bureau chief, watching the European Central Bank and eurozone economies. He has also worked in Bonn, Berlin, Jerusalem and Brussels. RSS
Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS
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