Guest post by Peter Tchir.
Today I will be attending Ben’s talk in NY. I’m curious to see him speak in person, but can’t help but think of the questions I would ask if I could.
- Do you think that low rates are hurting savers, allowing big established businesses to make money while stopping new entrants, and do you finally admit your wealth effect theory is totally wrong since the wealth isn’t well distributed and has failed to produce results?
- At one point will you admit that the ultimate exit strategy is to just forgive the debt? That for all the talk about fiscal cliff, it would still leave us with a large annual deficit and really no end in sight to a ever growing pile of debt, making debt forgiveness the logical next step since you already pay back all the coupon income?
Okay, those are the questions that I would like to ask, but if I was given a chance to ask those questions, I would probably be too nervous. They seem obnoxious, even by my standards, and as much as I’d like answers to them, here are some more likely questions I’d ask.
Must watch video by BOE’s Haldane on information assymetry, risk, HFT and much more.
“While other countries struggle to command confidence in their fiscal forecasts we have created an internationally admired and respected independent office for budget re- sponsibility. These bold steps have made Britain that safe haven in the sovereign debt storm…”
– George Osborne, UK Chancellor of the Exchequer, August 11, 2011
The financial crisis has imposed large costs on the global economy and revealed deficiencies in policy frameworks around the world. While the ongoing reforms to financial regulation aim to make the financial system more resilient, they cannot eliminate all the risks associated with large global capital flows. This paper argues that broader reforms to the International Monetary and Financial System (IMFS) are also required.
The paper sets out three objectives for a well-functioning IMFS: i) internal balance, ii) allocative efficiency and iii) financial stability. The IMFS has functioned under a number of different regimes over the past 150 years and each has placed different weights on these three objectives. Overall, the evidence is that today’s system has performed poorly against each of its three objectives, at least compared with the Bretton Woods System, with the key failure being the system’s inability to maintain financial stability and minimise the incidence of disruptive sudden changes in global capital flows.
There is little consensus in the academic literature, or among policymakers, on what are the underlying problems in the global economy which allow excessive imbalances to build in today’s IMFS and/or which impede the IMFS from adjusting smoothly to counteract these imbalances. This paper attempts to provide a framework for thinking about these underlying problems, and thus a means for discriminating among the reform solutions.
BOE coming out with rather bearish comments on the Economy. The initial reaction is a “healthy” sell off. All trading is only conducted by HFT, and liquidity is absolutely pathetic. BOE’s biggest concern is that “EU lacks a credible plan of dealiong with the crisis“. Well, we couldn’t have out it better ourselves.
European Union soon a memory? Charts below.
BOE’s minutes. Worth reading, since we are entering Stagflation in the UK.
There had been increasingly visible symptoms over the month of rising stress in financial markets as concerns about the vulnerabilities associated with the indebtedness of several euro-area governments and banks had intensified. These symptoms had included continued high levels of volatility in asset prices; a reduction in liquidity across a range of markets; signs of pressure on some individual institutions; and a generalised withdrawal from risk taking, reflected in price falls in an array of markets, including those for emerging-economy assets, commodities and high-yield credit.