...for the Dallas Fed. Once again, insolvency is not a concern with sovereign currency issuing countries (although inflation certainly is, which would be of concern if there was actual inflation, commodity prices notwithstanding).
I also do not discount the possibility that the Fed is pushing back against futher congressional oversight and is deflecting attention to the "Fiscal" side of things in order to distract from the "monetary policy" side of the ledger. Thus, it appears it was Mr. Fisher who gets the lucky job of Knights errant for his master.
"If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when," Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt. "The short-term negotiations are very important, I look at this as a tipping point."
Tuesday, March 22, 2011
Monday, March 21, 2011
Libya and expediency
Power does truly astonishing things. The below question and response by our President (who was at the time of this question merely a Senator) demonstrates how emotion trumps principal even in extremely discliplined individuals, and how the vast majority of arguments are not truth-finding expeditions, but mechanisms designed to dominate in furtherance of short-term goals. If the President were presented with the below (his brain has likely jettisoned the memory of this in order to preserve congruence with current actions in Libya) he likely would argue the definition of "immiment threat" includes oil supply fluctuations. He would also point to the U.N. resolution and being demonstrative of some threat.
These are the contortions people make when their goal is to hold power. This is the system we have, so I do not begrudge any player in the game who plays it well. But it is instructive to observe what is said under one context, and what is done in another.
Barack Obama's Q&A
2. In what circumstances, if any, would the president have constitutional authority to bomb Iran without seeking a use-of-force authorization from Congress? (Specifically, what about the strategic bombing of suspected nuclear sites -- a situation that does not involve stopping an IMMINENT threat?)
The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.
As Commander-in-Chief, the President does have a duty to protect and defend the United States. In instances of self-defense, the President would be within his constitutional authority to act before advising Congress or seeking its consent. History has shown us time and again, however, that military action is most successful when it is authorized and supported by the Legislative branch. It is always preferable to have the informed consent of Congress prior to any military action.
As for the specific question about bombing suspected nuclear sites, I recently introduced S.J. Res. 23, which states in part that “any offensive military action taken by the United States against Iran must be explicitly authorized by Congress.” The recent NIE tells us that Iran in 2003 halted its effort to design a nuclear weapon. While this does not mean that Iran is no longer a threat to the United States or its allies, it does give us time to conduct aggressive and principled personal diplomacy aimed at preventing Iran from developing nuclear weapons.
These are the contortions people make when their goal is to hold power. This is the system we have, so I do not begrudge any player in the game who plays it well. But it is instructive to observe what is said under one context, and what is done in another.
Barack Obama's Q&A
2. In what circumstances, if any, would the president have constitutional authority to bomb Iran without seeking a use-of-force authorization from Congress? (Specifically, what about the strategic bombing of suspected nuclear sites -- a situation that does not involve stopping an IMMINENT threat?)
The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.
As Commander-in-Chief, the President does have a duty to protect and defend the United States. In instances of self-defense, the President would be within his constitutional authority to act before advising Congress or seeking its consent. History has shown us time and again, however, that military action is most successful when it is authorized and supported by the Legislative branch. It is always preferable to have the informed consent of Congress prior to any military action.
As for the specific question about bombing suspected nuclear sites, I recently introduced S.J. Res. 23, which states in part that “any offensive military action taken by the United States against Iran must be explicitly authorized by Congress.” The recent NIE tells us that Iran in 2003 halted its effort to design a nuclear weapon. While this does not mean that Iran is no longer a threat to the United States or its allies, it does give us time to conduct aggressive and principled personal diplomacy aimed at preventing Iran from developing nuclear weapons.
This too shall FAIL.
A "quantum leap" in finacial regulatory surveillance...interesting analogy...so what is the probability that the EU spontaneously combusts?
More of the Khyber pass approach to governmental regulation. The solution is always known in advance (more "official" oversight and control), but the problems have not even materialized. In any other field of human endeavor, this approach would be laughable. In the EU is it "good policy".
EUOBSERVER / FEATURE - After months of often bitter back-room negotiations, European finance ministers have finally given the green light to a radical new centralised EU oversight of national budgeting processes and, broader still, of all economic policies - both of countries that use the single currency and those that do not.
Print
Comment article
The unprecedented shift in powers to the bloc from member-state parliaments, heavily limiting what is known in the jargon as "policy space", or the ability of countries to write their own laws, was saluted by EU economics chief Olli Rehn.
"Today the EU member states are endorsing the basic thrust of the six legislative proposals by the commission," he told reporters after ministers had given their approval to what European decision-makers have dubbed the 'Six Pack'.
The ministers were not endorsing a light work-out of economic sit-ups, but a different sort of regime entirely - a half a dozen new far-reaching laws that the commissioner said "will lead to a quantum leap of economic surveillance in Europe."
The ministers were not endorsing a light work-out of economic sit-ups, but a different sort of regime entirely - a half dozen new far-reaching laws that the commissioner said "will lead to a quantum leap of economic surveillance in Europe."
Although much of the often very technical discussion, aimed at convincing markets of Europe's commitment to tighter fiscal decision-making, has been buried in the back of the financial pages of newspapers, those at the heart of the EU are under no illusion about the profound transformation the bloc is about to undergo.
"What is going on is a silent revolution - a silent revolution in terms of stronger economic governance by small steps," commission President Jose Manuel Barroso said last June after the EU Council first gave the nod to the commission's initial concepts for that would later evolve into the Six Pack.
"The member states have accepted - and I hope they understood it exactly – but they have accepted very important powers of the European institutions regarding surveillance, and a much stricter control of the public finances," he said at the time.
More of the Khyber pass approach to governmental regulation. The solution is always known in advance (more "official" oversight and control), but the problems have not even materialized. In any other field of human endeavor, this approach would be laughable. In the EU is it "good policy".
EUOBSERVER / FEATURE - After months of often bitter back-room negotiations, European finance ministers have finally given the green light to a radical new centralised EU oversight of national budgeting processes and, broader still, of all economic policies - both of countries that use the single currency and those that do not.
Comment article
The unprecedented shift in powers to the bloc from member-state parliaments, heavily limiting what is known in the jargon as "policy space", or the ability of countries to write their own laws, was saluted by EU economics chief Olli Rehn.
"Today the EU member states are endorsing the basic thrust of the six legislative proposals by the commission," he told reporters after ministers had given their approval to what European decision-makers have dubbed the 'Six Pack'.
The ministers were not endorsing a light work-out of economic sit-ups, but a different sort of regime entirely - a half a dozen new far-reaching laws that the commissioner said "will lead to a quantum leap of economic surveillance in Europe."
The ministers were not endorsing a light work-out of economic sit-ups, but a different sort of regime entirely - a half dozen new far-reaching laws that the commissioner said "will lead to a quantum leap of economic surveillance in Europe."
Although much of the often very technical discussion, aimed at convincing markets of Europe's commitment to tighter fiscal decision-making, has been buried in the back of the financial pages of newspapers, those at the heart of the EU are under no illusion about the profound transformation the bloc is about to undergo.
"What is going on is a silent revolution - a silent revolution in terms of stronger economic governance by small steps," commission President Jose Manuel Barroso said last June after the EU Council first gave the nod to the commission's initial concepts for that would later evolve into the Six Pack.
"The member states have accepted - and I hope they understood it exactly – but they have accepted very important powers of the European institutions regarding surveillance, and a much stricter control of the public finances," he said at the time.
Friday, March 18, 2011
fungibility
Economists love to talk about the relative diesireability of assets using two basic variables: price and yield. These characteristics form the bedrock for most theories of international economics and have been hoisted upon media truncheons this week as cause for concern and explanations for the fall of the dollar.
In my view, this is a naively myopic view of what assets are and why people, institutions, and other sovereigns buy them.
For example, foerign exchange is used instead of naval action to ensure a low exhange rate-it has nothing to do with the intrinsic desireability of us assets, rather the effects on other parts of the balance scale in case of purchase.
Sovereign bonds and the currencies they are denominated in encompass far more than the traditional definitions of "money". They are now foreign policy transmission systems and brand marketing for the "core values" of whatever sovereign they hail from.
In my view, this is a naively myopic view of what assets are and why people, institutions, and other sovereigns buy them.
For example, foerign exchange is used instead of naval action to ensure a low exhange rate-it has nothing to do with the intrinsic desireability of us assets, rather the effects on other parts of the balance scale in case of purchase.
Sovereign bonds and the currencies they are denominated in encompass far more than the traditional definitions of "money". They are now foreign policy transmission systems and brand marketing for the "core values" of whatever sovereign they hail from.
Wednesday, March 16, 2011
"Important"
One of the themes of this blog is to demonstrate by way of example the benefit (I would say neccesity) of univariate, uniform skepticism. We as humans find it difficult to inject skepticism and critical thought into discussions that contain a subject that we have an emotional connection with.
Thus, the vast majority of what we see and read appeals to our emotions in the attempt to "drop our shields" and attempt to influence what we deem as "important".
This leads to some truly silly conclusions...discussions of behavior given a celebrity's laviciousness, a paramilitary response to state budget cuts (government should be trusted like any other entity you barely know), etc.
The point being that in the collisions between passion and reason, passion wins.
So we should all take some deep breaths before simply assuming a nuclear winter, or that aftershocks in Japan herald the awakening of GODZILLA! From his slumber and represent his measured steps to the mainland, for the media has simply played on our ignorance and posited an extremely unlikely but awful outcome in our minds, and we are locked onto this emotional target like the movie Top Gun...or a Chinese Naval demonstration.
Thus, the vast majority of what we see and read appeals to our emotions in the attempt to "drop our shields" and attempt to influence what we deem as "important".
This leads to some truly silly conclusions...discussions of behavior given a celebrity's laviciousness, a paramilitary response to state budget cuts (government should be trusted like any other entity you barely know), etc.
The point being that in the collisions between passion and reason, passion wins.
So we should all take some deep breaths before simply assuming a nuclear winter, or that aftershocks in Japan herald the awakening of GODZILLA! From his slumber and represent his measured steps to the mainland, for the media has simply played on our ignorance and posited an extremely unlikely but awful outcome in our minds, and we are locked onto this emotional target like the movie Top Gun...or a Chinese Naval demonstration.
The Fed has a pet Unicorn...
...How else to credibly explain some of the musings emanating from Constitution Avenue?
"Fed + QE2– end of the program won’t be a big deal for Treasuries according to
former Fed official Mishkin - Mishkin said Wednesday the end of the U.S.
Treasury's US$600 billion government bond purchase program in June is unlikely
to have a significant impact on long-term bond yields. DJ
Translation: "I don't think anyone will notice us gone."
ADDENDUM: Yes, I am aware he is a former official, but one who enjoys speical status amongst the euneuch class and is useful for diffusion of official party line.
"Fed + QE2– end of the program won’t be a big deal for Treasuries according to
former Fed official Mishkin - Mishkin said Wednesday the end of the U.S.
Treasury's US$600 billion government bond purchase program in June is unlikely
to have a significant impact on long-term bond yields. DJ
Translation: "I don't think anyone will notice us gone."
ADDENDUM: Yes, I am aware he is a former official, but one who enjoys speical status amongst the euneuch class and is useful for diffusion of official party line.
Tuesday, March 15, 2011
TIC data...
...indicates the world still has a healthy appetite for Treasuries. This on the heels of a very public announcement by the Newport Beach bond man that he has jettisoned his entire inventory of treasuries (now, for the purposes of this discussion, we will not comment on whether or not this is true in a strict sense in light of total derivative exposure and the Newport Beach man's penchant for selling option premium).
This is to be expected. What other currency in the world offers as much safety (from an institutional sense), inflation risk be damned? Which other jurisdiction is most probable to return SOME form of capital to you should Risk across the globe increase?
This is to be expected. What other currency in the world offers as much safety (from an institutional sense), inflation risk be damned? Which other jurisdiction is most probable to return SOME form of capital to you should Risk across the globe increase?
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