MARKETS
Distorted Markets
& Disillusionment One Asset At A Time – ZH
Citi’s Matt King: reach for yield has distorted primary and secondary
markets, forced risk-averse investors into alternative asset classes, distorted
markets beyond any fundamentals, and left markets incredibly illiquid. This
sets up a problem that we are already seeing as investors are disillusioned one
asset at a time.
Global Equity Market
Correlation Matrix – Bespoke
Every Chart You
Should Be Tracking But Were Too Afraid To Find – ZH
Punchline’s lated edition
ECONOMICS
A very nice site with
US macroeconomics charts – Macrotrends
The Finance Macro
Canon –
Noahpinion
Stop me if you've heard these one before: 1. Inflation is caused by
increases in the money supply…
Noah Smith on the “QE
causes high inflation” fallacy – The
Money Illusion
The real question is not whether QE is inflationary, or whether it is
inflationary but not highly inflationary, but why is it inflationary?
Beyond Inflation
Targets – Project
Syndicate
The 2008 financial crisis made it clear that monetary policy should
focus on more than the prices of goods and services. How should a revised
mandate for central banks be structured to maintain their focus on low
inflation while allowing monetary policy to address other issues when
appropriate?
This is a question to which I have not given a huge amount of thought,
since all central banks have declared an intention to unwind QE eventually and
have given the impression that any other policy would be disastrously
inflationary.
We will need decades
of austerity, not years – The
Telegraph
Government after government in almost every country in the world has
piled up future commitments without setting aside any funds to meet them.
Macro-prudential
policy: Ambidextrous or ham-fisted? – FT
In a talk delivered on 3 January, which the ever-so-slightly
disorganised Andy Haldane has just got round to writing up, the Bank of
England’s head of financial stability beautifully sets out the new central bank
orthodoxy on the benefits of macro-prudential policy.
Emerging Markets’
Bubble Troubles – Project
Syndicate
Emerging economies have been pursuing policies with little regard for
the lessons of recent financial crises. Countries like India, Brazil, South
Africa, and Indonesia have been hit by the Fed’s gradual exit from quantitative
easing – and the asset bubbles that it has fueled.
Capitalism Redefined – Democracy
Journal
What prosperity is, where growth comes from, why markets work—and how we
resolve the tension between a prosperous world and a moral one.
Assessing Reserve
Adequacy - Further Considerations – IMF
While other instruments, such as official credit lines and bilateral
swap lines, are also external buffers, for most countries they principally act
as a complement to their official reserves. For countries with sound
fundamentals and a good policy framework, reserves provide policy makers with
considerable space to respond to transitory shocks. However, this space
diminishes as fundamentals deteriorate and the existence of adequate reserves
does not, by itself, eliminate the risk of market pressures.
Making
macroprudential stress tests more effective – voxeu.org
Macroprudential stress tests have been employed by regulators in the US
and Europe to assess the solvency condition of financial firms in adverse
macroeconomic scenarios. The capital required by regulators in such adverse
scenarios is strongly dependent on Basel capital standards. This column argues
that macro stress tests would be more effective if capital requirements were
measured differently from the current regulatory risk weight-based approach,
and in particular, were based on total assets and on market risks.
The Regulatory
Responses to the Global Financial Crisis: Some Uncomfortable Questions – IMF
Policy makers need to resist, however, fine-tuning regulations: a “do
not harm” approach is often preferable. And as risks will remain, crisis
management needs to be made an integral part of system design, not relegated to
improvisation after the fact.
The intolerance of
uneconomic economics – Pieria
The argument that macroeconomics may have taken a wrong turn somewhere
along the line and could have benefitted from a more pluralist approach is one
that doesn’t go down well at the heart of the orthodox economics community. But
it feels like an argument that is increasingly being made. And not just by the
irredeemably heterodox. It appears that closer to the core of the discipline
there is some momentum gathering behind the idea that a bit of a rethink and a
reappraisal is needed.