Sunday, August 30, 2009
Saturday, August 29, 2009
Friday, August 28, 2009
Account name Aug 26, 2009 Net portfolio holdings of Maiden Lane LLC (1) 26,014 Outstanding principal amount of loan extended by the Federal Reserve Bank of New York (2) 28,820 Accrued interest payable to the Federal Reserve Bank of New York (2) 362 Outstanding principal amount and accrued interest on loan payable to JPMorgan Chase & Co. (3) 1,227 1. Fair value. Fair value reflects an estimate of the price that would be received upon selling an asset if the transaction were to be conducted in an orderly market on the measurement date. Revalued quarterly. This table reflects valuations as of June 30, 2009. Any assets purchased after this valuation date are initially recorded at cost until their estimated fair value as of the purchase date becomes available. 2. Book value. This amount was eliminated when preparing the Federal Reserve Bank of New York's statement of condition consistent with consolidation under generally accepted accounting principles. Refer to the note on consolidation accompanying table 10. 3. Book value. The fair value of these obligations is included in other liabilities and capital in table 1 and in other liabilities and accrued dividends in table 9 and table 10.
mortgage related securities, residential and commercial mortgage loans and associated hedges (Asset Portfolio)
Thursday, August 27, 2009
Generally Accepted Accounting Principles are not generally accepted in China. This is partly because the Chinese have their own accounting rules and partly because rules are for breaking.
And it’s not just that some company owners are trying to confuse the tax authorities. It’s that, when they do so, they end up also confusing themselves.
The gymnastics they do with revenues and costs are so impressive that the Beijing Olympics should have added an event especially for accountants. Markets with developed gray economies, like Italy, are well known for the practice of keeping one set of accounts for the government and another for the owners so they know what’s really going on. Chinese companies often dispense with the second set, hence the confusion. That’s probably true of other “developing gray economies.”
Tuesday, August 25, 2009
The trouble is that the Chinese clearly feel they have enough U.S. government bonds. Their great anxiety is that the Obama administration's very lax fiscal policy, plus the Federal Reserve's policy of quantitative easing (in layman's terms, printing money), are going to cause one or both of two things to happen: the price of U.S. bonds could fall and/or the purchasing power of the dollar could fall. Either way the Chinese lose. Their current strategy is to shift their purchases to the short end of the yield curve, buying Treasury bills instead of 10-year bonds. But that doesn't address the currency risk. In a best-selling book titled Currency Wars, Chinese economist Song Hongbing warned that the United States has a bad habit of stiffing its creditors by letting the dollar slide. This, he points out, is what happened to the Japanese in the 1980s. First their currency strengthened against the dollar. Then their economy tanked.If only this tectonic shift of maturity swapping was true. TIC data (linked on this page) does not support this and shows either steady or slightly falling purchases of U.S. maturities by foreign concerns all across the curve. China has not done anything remotely like revoking the U.S. credit card. And, let us recall that the current account deficit is NOT "Financed" by foreign purchasers of U.S. dollar denominated securities. That is a remnant of the gold standard and is not applicable. The U.S. spends then taxes...it does NOT need to "get" dollars from Chinese or anyone else in order to deficit spend.