Death Star Economics



“an intriguing day for monetary policy”

So there we go. Bernanke announced what everybody wanted to hear. For $40bn per month, the Fed will buy agency mortgage-backed securities until the labor market shows any signs of vitality besides twitching. Rates will stay locked in until summer 2015.

“We’re not promising a cure to all these ills,” Bernanke said at the news conference. “But what we can do is provide some support.”

It sounds like he really tried, although I’d also hope that the amount of crises we’ve been through has yielded a financial enlightenment that distances us from the conviction of quantitative easing as a panacea. Unfortunately, it sparked an avalanche of negative commentaryFT Lex appears outraged:

Markets had been expecting Federal Reserve chairman Ben Bernanke to refill the punch bowl. He did, but the forgot the fruit juice. The Fed is now ladling out straight booze.

Altogether, “an intriguing day for monetary policy.

In Japan, the yen rose against the dollar in response to the Fed’s action, leading policy makers to threaten currency intervention in response to the response, hoping to get the Bank of Japan to ease their policies in response to the response to the response. read article

Back in the USprocrastination is on the best way to be signed into law. Passed by the House of Representatives and now with the Senate, the bill in question allows lawmakers to postpone dealing with the government’s funding gap, including the eminent expiry of tax cuts in January, until after the elections. It will also keep the government from running out of money in October, as it guarantees another six month of funding of state agencies. The stopgap budget is the fence at the fiscal cliff, the overused term describing the above, but it is not the only looming problem for America’s finances. Remember last year, when there was too much debt and too little ceiling? Yeah, that will happen again, it’s just a matter of time. read article

Yesterday, Greek unions agreed to a general strike on September 26. Simultaneously, IMF officials said the country would need a third bailout and had only fulfilled 22% of the conditions of the last one. Greece denied the allegations.

After its presentation on Wednesday afternoon, Apple has already sold out of the new iPhone 5, just one hour after the presale opened online. That was quick. Those who still got an order in, will receive their device on September 21. Everyone else will have to wait for restocking, suggesting an even more positive Q4 sales forecast for Apple. read article

Weekend reading:

– One for the “awesome people hanging out together” list: Michael Lewis and Barack Obamaread article

– “If regretsapologies and promises to behave better were redeemable for cash, the world’s banks would be rolling in it,” read article

– The U.S. Employment-Population Reversal in the 2000s: Facts and Explanationsread article

– Bridgewater Associate’s CIO Ray Dalio on … everythingread article

Have a good one.


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