Monthly Archives: oktober 2011

Quiz: Hvor høy rente må Italia betale for å låne i 10 år?

Ehem. Kremt. Kremt:
Screen shot 2011 10 31 at 20 23 24
Selv om Oljefondet har investert som en pensjonist i det siste, redusert obligasjons-referanseproteføljen, solgt seg ut av usikker gjeld, og prioritert annen gjeld, så har vi en del kroner i Italia.

Dette ser ut som en jobb for Super-Mario. Bare han som har størst fluesmekker.

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Hva The Federal Reserve gjorde da den reddet AIG fra stupet?

I september 2008 gav hovedstyret i The Federal Reserve grønt lys til å redde forsikringsgiganten AIG. Sammen med finansdepartementet gav den lån verdt $182 milliarder. Nå har U.S. Government Accountability Office utgitt sin rapport om hva som skjedde.

Rapporten forsøker å belyse 4 ting.

  1. Nøkkelavgjørelser tatt
  2. ‘Maiden Lane III’ (MLIII) investeringsmetode
  3. I hvilken grad avgjørelser var i tråd med eksisterende lov
  4. Lekser lært fra AIG redningen

Noen utdrag:

While warning signs of the company’s difficulties had begun to appear a year before the Federal Reserve System provided assistance, Federal Reserve System officials said they became acutely aware of AIG’s deteriorating condition in September 2008.

Although the Federal Reserve Board approved ML III with an expectation that concessions would be negotiated with AIG’s counterparties, FRBNY made varying attempts to obtain these discounts. FRBNY officials said that they had little bargaining power in seeking concessions and would have faced difficulty in getting all counterparties to agree to a discount. While FRBNY took actions to treat the counterparties alike, the perceived value of ML III participation likely varied by the size of a counterparty’s exposure to AIG or its method of managing risk.

A series of complex relationships grew out of the government’s intervention, involving FRBNY advisors, AIG counterparties, and others, which could expose FRBNY to greater risk that it would not fully identify and appropriately manage conflict issues and relationships.

Rapporten har en fantastisk tidslinje-grafikk på side 14, fra 2006 og helt til redningsbøyen september 2008.

Mens jeg leser denne rapporten er det fortsatt vanskelig å forstå at ingen, hverken The Fed, The Fed NY eller finansdepartementet har gjort noe slikt i sin historie; gjort noe så drastisk som å redde verden største forsikringsselskap.


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Nordlyset som sett fra International Space Station. #Wow

Som om planeten visste det var Halloween:

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Pronomens hemmelige verden. Dating-utgaven:

Du verden hva det forskes på, pronomen-edition:

In the speed-dating study, Pennebaker and his colleague Molly Ireland found that couples who used similar levels of personal pronouns, prepositions and even articles were three times as likely to want to date each other compared with those whose language styles didn’t match.

The metric, called language style matching (L.S.M.), was also better at predicting who didn’t make a love connection than the individuals themselves, several of whom showed interest in a partner who did not reciprocate.

Så den Cola-Zero reklamen er bare fiksjon?

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Sentralbanken har store problemer med å være en………sentralbank?

Paul De Grauwe, University of Leuven og rådgiver til EU president Barrosso skriver i VoxEU om den europeiske sentralbanken og noen av vanskelighetene den har med å være en sentralbank. Starten av tredje paragraf starter med «There is no sillier way to implement a bond purchase programme than the ECB way». Her er De Grauwe:

The Eurozone crisis plays on to a familiar tune. Finance ministers meet on the weekend only for markets to dismiss their efforts the following Monday. This column argues that Europe’s leaders have lost touch, that the ECB has the firepower but is not prepared to use it, and that the outcome of all this is depressingly clear: Defeat by the financial markets.

Imagine an army going to war. It has overwhelming firepower. The generals, however, announce that they actually hate the whole thing and that they will limit the shooting as much as possible. Some of the generals are so upset by the prospect of going to war that they resign from the army. The remaining generals then tell the enemy that the shooting will only be temporary, and that the army will go home as soon as possible. What is the likely outcome of this war? You guessed it. Utter defeat by the enemy.

The ECB has been behaving like the generals. When it announced its programme of government bond buying it made it known to the financial markets (the enemy) that it thoroughly dislikes it and that it will discontinue it as soon as possible. Some members of the Governing Council of the ECB resigned in disgust at the prospect of having to buy bad bonds. Like the army, the ECB has overwhelming (in fact unlimited) firepower but it made it clear that it is not prepared to use the full strength of its money-creating capacity. What is the likely outcome of such a programme? You guessed it. Defeat by the financial markets.

Financial markets knew that the ECB was not fully committed and that it would stop the programme. As a result, they knew that the stabilisation of the price of government bonds would only be temporary and that after the programme is discontinued prices would probably go down again. Few investors wanted to keep these bonds in their portfolios. As a result, government bonds continued to be sold, and the ECB was forced to buy a lot of them.
There is no sillier way to implement a bond purchase programme than the ECB way. By making it clear from the beginning that it does not trust its own programme, the ECB guaranteed its failure. By signalling that it distrusted the bonds it was buying, it also signalled to investors that they should distrust these too.

Surely once the ECB decided to buy government bonds, there was a better way to run the programme. The ECB should have announced that it was fully committed to using all its firepower to buy government bonds and that it would not allow the bond prices to drop below a given level. In doing so, it would create confidence. Investors know that the ECB has superior firepower, and when they get convinced that the ECB will not hesitate to use it, they will be holding on to their bonds. The beauty of this result is that the ECB won’t have to buy many bonds.

Why has the ECB not been willing to use this obvious and cheaper strategy?

Part of the answer has to do with the objections that have been raised against the idea that the central bank should be a lender of last resort in the government bond markets of a monetary union. Some are serious (moral hazard); others are phony (inflation risk). I discussed these in De Grauwe (2011) (see also Wyplosz 2011). My impression, however, is that these objections hide another more fundamental reason. The people sitting around the table in Frankfurt continue to believe that financial stability is not part of their core business, and, to use the words of Trichet, that there is only one needle on the Frankfurt compass and that is inflation. As long as this view prevails the ECB will be reluctant to do the obvious.

The result of this failure of the ECB to be a lender of last resort has been that a surrogate institution, the EFSF/ESM, had to be created that everybody knows will be ineffective. It has insufficient firepower and has an unworkable governance structure where each country keeps its veto power. In times of crisis it will be paralysed. As markets know this, its credibility will be weak.

To hide these shortcomings European leaders are now creating the fiction that by some clever leveraging trick the resources of the EFSF/ESM can be multiplied, allowing the ECB to retire to its Panglossian garden of inflation targeting. European leaders should know, however, that leverage creates risk, very large risks. These appear with full force when liquidity crises erupt. Thus when the leverage trick will be most needed, it will fail as it will show how risky the positions are of those who have guaranteed the leverage construction. Governments which now enjoy AAA creditworthiness will take the full blow of a 100% loss on their equity tranches and will lose their creditworthiness in one blow. The whole risky construction will collapse like other clever financial constructions of the recent past.

Academics have the reputation of living in an ivory tower far away from the realities of the world. My impression is that instead of the academics, it is the European leaders who have been living in an ivory tower. Disconnected from the economic and financial realities, they have created an institution that does not work and will never do so properly. Now they are creating a financial gimmick that, in their fantasies, they expect to solve the funding problems of major Eurozone countries. It is time for the European leaders to step back into the real world.

De Grauwe, P, (2011), The ECB as a lender of last resort,, 18 August.
Wyplosz, C, (2011), They still don’t get it,, 25 October.

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Husker du dette bildet? Vel, hun fikk sparken for det.

Its wrong to create
Damen på bildet er Caitlin Curran. Hun forklarer selv hva som skjedde:

My boyfriend, Will, and I decided to take Friedersdorf’s words and use them, perhaps more literally than he intended. We printed them out, taped them to poster board, and headed to the Occupy Wall Street march in Times Square, on October 15. The plan was for Will to hold the sign, and for me to observe what happened and post reports to my personal Twitter account. (Video of Will attracting attention with the sign before I did is on your right, or click here to watch it.) But, inevitably, Will developed sign-holding fatigue, and I took over momentarily. I was standing beneath a news ticker near West 43rd Street and Broadway, and people began cheering as a headline about the movement scrolled across the ticker. I looked up, and at that moment a photographer took a photo of me holding the sign, and posted it to Twitter shortly thereafter.

Curran we en freelance journalist, og tenkte historien kunne bli et bra program ved WNYC Radio and Public Radio International, hvor hun hadde jobbet som web produsent 20 timer i uka. Dagen etter fikk hun sparken.

The next day, The Takeaway’s general manager fired me over the phone, effective immediately. He was inconsolably angry, and said that I had violated every ethic of journalism, and that this should be a «teaching moment» for me in my career as a journalist.

Og Curran er ikke alene.

That same week Lisa Simeone was in a similar situation. Simeone is a Baltimore-based freelance journalist, former host of the public radio program «Soundprint,» and current host of «The World of Opera,» which NPR announced last week it will no longer distribute. She was fired from «Soundprint,» after conservative site The Daily Caller criticized her (and NPR) for supporting Occupy D.C. Simeone and I don’t know each other, though we do have some similarities: we’re both journalists, both of us were at one time affiliated with NPR in some way, and I grew up in Baltimore, where Simeone lives now.

Hva driver Simeone med:

«I find it puzzling that NPR objects to my exercising my rights as an American citizen – the right to free speech, the right to peaceable assembly—on my own time in my own life… I’ve never brought a whiff of my political activities into the work I’ve done for NPR World of Opera. What is NPR afraid I’ll do—insert a seditious comment into a synopsis of Madame Butterfly?»


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En John Bates Clark og MacArthur økonom hjelper NBA spilleren i streiken.

For oss NBA fantaster der ute, National Basketball Association er midt i en konflikt. Ingen kamper i oktober, ingen kamper i november og ingen seriestart før eiere og spillere har kommet til enighet.

Siden 2005 har økonomen Kevin Murphy jobbet med NBA spillerne:

«Kevin is far and away the smartest guy in the field,» Freakonomics author and Chicago colleague Steven Levitt said in a 2006 profile of Murphy. «Not only is he widely regarded as the smartest economist on Earth, but he can also fix your refrigerator.»

Murphy has analyzed the economics of health and medical research, of addictions and national drug policy and of inequality and labor markets. He was brought in to assist Microsoft during its antitrust battles with the Justice Department a decade ago. He and his former professor at UCLA, Ben Klein, worked with the NFL during the formulation of its Plan B free agency system. He teaches an advanced microeconomics class this term, is known to be a mean woodworker and is mired in his second go-round of NBA negotiations.

«A colleague of mine here, John Huizinga, was the agent for Yao Ming,» said Murphy, a sturdy, non-tweedy type of academic known for his trademark ball cap (he reportedly wore one even when he testified before Congress). «I guess Billy asked him, well, do you know any economists who would be good to help. John recommended me. I talked to Billy and started working for them in ’05.»

NBA konflikten er tøff, den er emosjonell og det er mye penger involvert. Lykke til Kevin.

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USA neste uke. Fyll kalenderen.

Calculated Risk med kalenderfyll. Fredag kommer arbeidstall.

—– Monday, Oct 31st —–

9:45 AM: Chicago Purchasing Managers Index for October. The consensus is for a decrease to 58.0, down from the strong 60.4 in September.

10:30 AM: Dallas Fed Manufacturing Survey for October. The consensus is for contraction of -5.0 from expansion of 5.9 in September. This is the last of the regional Fed manufacturing surveys for October, and the results have been mixed – but generally better than for September.

—– Tuesday, Nov 1st —–

10:00 AM: Construction Spending for September. The consensus is for a 0.3% increase in construction spending.

10:00 AM ET: ISM Manufacturing Index for October. The consensus is for a slight increase to 52.0 from 51.6 in September.

All day: Light vehicle sales for October. Light vehicle sales are expected to increase to 13.2 million (Seasonally Adjusted Annual Rate), from 13.1 million in September.

This graph shows the September estimate for light vehicle sales of 13.4 million SAAR.

Edmunds is forecasting 13.4 million:
An estimated 1,033,257 new cars will be sold in October, for a projected Seasonally Adjusted Annual Rate (SAAR) of 13.4 million units, forecasts … This sales pace would mark the highest monthly SAAR since August 2009, when sales were inflated by the Cash for Clunkers program.

—– Wednesday, Nov 2nd —–

7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been especially weak since early August, although this doesn’t include cash buyers.

8:15 AM: The ADP Employment Report for October. This report is for private payrolls only (no government). The consensus is for 100,000 payroll jobs added in October, up from the 91,000 reported in September.

10:00 AM: Q3 Housing Vacancies and Homeownership report from the Census Bureau. As a reminder: Be careful with the Housing Vacancies and Homeownership report. This report is frequently mentioned by analysts and the media to track the homeownership rate, and the homeowner and rental vacancy rates. Unfortunately the report is based on a fairly small sample, and does not track the decennial Census data.

12:30PM: FOMC Meeting Announcement. No changes are expected to interest rates. The Fed will release its quarterly economic forecasts prior to the press briefing. The Fed growth forecasts are expected to be revised down once again. I’ll post a preview on Sunday.

2:15 PM: Fed Chairman Ben Bernanke holds a press briefing following FOMC announcement.

—– Thursday, Nov 3rd —–

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a slight decrease to 400,000 from 402,000 last week. The 4-week average has declined recently, but is still above 400,000.

10:00 AM ET: Manufacturers’ Shipments, Inventories and Orders for September. The consensus is for a 0.2% decrease in orders.

10:00 AM: ISM non-Manufacturing Index for October. The consensus is for a no change at 53.0 in October, the same as in September. Note: Above 50 indicates expansion, below 50 contraction.

—– Friday, Nov 4th —–

8:30 AM: Employment Report for October.

The consensus is for an increase of 90,000 non-farm payroll jobs in October, down from the 103,000 jobs added in September. However the September report was boosted by returning Verizon workers – excluding those workers, this would be an improvement over September, but still a very weak jobs report.

This graph shows the net payroll jobs per month (excluding temporary Census jobs) since the beginning of the recession. The consensus forecast for October is in blue.

The consensus is for the unemployment rate to remain at 9.1% in October.

This second employment graph shows the percentage of payroll jobs lost during post WWII recessions through September.

Through the first nine months of 2011, the economy has added 1.074 million total non-farm jobs or just 119 thousand per month. This is a better pace of payroll job creation than last year, but the economy still has 6.6 million fewer payroll jobs than at the beginning of the 2007 recession. The economy has added 1.341 million private sector jobs this year, or about 149 thousand per month.

There are a total of 13.992 million Americans unemployed and 6.24 million have been unemployed for more than 6 months. Very grim.