Dissent within the FOMC
Is this the beginning of a Federal Reserve versus regional bank split?
Three regional bank presidents indicated they thought the discount rate should be increased by 25 bp to 1 per cent, according to the minutes of the discount rate meetings, released today. None of the Fed governors voted for the action and the nine regional bank presidents also recommended against increasing the rate. Read more
Robbing the central bank
Nope, I won’t be quoting bail-out critics. There was literally a theft.
Via Reuters Read more
Looking for the housing bottom
In which US cities are home prices likely to fall?
One measure is to look at the amount home prices have fallen, relative to the increases in their rental prices. Moves in rental prices tend to represent fundamental changes in the value of a property (people are paying only what it’s worth to stay there) rather than bubble-induced speculation about the future value of the property. In markets where there are bubbles, eventually, home prices should fall back in line with rental prices. Read more
The new Brookings-Financial Times index
The Brookings Institution and the Financial Times are today launching a new index to take the pulse of the world economy. It is a wonderful online tool which allows the user to look at trends in the world economy, in each G20 country, and in its component parts all on a consistent basis.
Devised principally by Eswar Prasad, professor at Cornell University and Senior Fellow at the Brookings Institution, the index show how emerging markets are leading the global recovery, how growth in trade and industrial production has risen back to pre-crisis levels, while employment still lags. It also shows how finanical indicators were leading the real economic recovery until the past month, when they have dived. Read more
Poland holds rates
The National Bank of Poland today announced (as expected) that it would hold its policy rates for the eleventh straight month.
No surprise, though the country is suffering with above target inflation. But few European countries (notably Norway) have raised rates, and the eurozone crisis is causing others, who may have been on the cusp of following suit, to hold off. Read more
The $21bn bail-out item
$21bn.
That’s the amount the Congressional Budget Office estimates the Federal Reserve’s credit programmes cost US taxpayers.
Of course, that’s not on a cash basis. The CBO has previously estimated that the Fed will be paying the Treasury around $70bn a year in 2010 and 2011 (compared to payments of between $18bn to $34bn from 2000 to 2008) because of the expected higher yields of the riskier-than-normal assets the US central bank bought to stabilise the economy during the crisis.
But, of course, there is risk. They might pay out less. They might not pay out at all. And, in many cases, the price the Fed paid for them wasn’t discounted for the associated risk. Now the CBO has estimated the amount the Fed overpaid – $21bn. Here’s there breakdown. Read more
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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
