Cato Institute Monetary Policy Conference

 

• @ToddSullivan Good conference, videos will b posted here: http://t.co/wu2DCMY2 & Plosser’s talk will b here: http://t.co/VH1zLn30 #CMC30 $$ Nov 16, 2012
• Plosser: “Such an exit depends on the Fed?s ability to be systematic and transparent about its policy decisions.” $$ #CMC30 Nov 15, 2012
• Plosser: ” Avoiding these risks is dependent on the Fed executing a graceful exit from this period of extraordinary accommodation” #CMC30 $$ Nov 15, 2012
• Plosser: “The fourth principle is to strive to ensure central bank independence.” $$ #CMC30 Nov 15, 2012
• Plosser: “The third principle is to be clear and transparent in communicating to the public the policy actions that are taken.” #CMC30 $$ Nov 15, 2012
• Plosser: ” One way to do this is for the central bank to articulate a reaction function or rule that will guide policy decisions.” #CMC30 $$ Nov 15, 2012
• Plosser: “…by describing how they will conduct policy in a way that is consistent with those goals. ” $$ #CMC30 Nov 15, 2012
• Plosser: “The second principle is for policymakers to make a credible commitment to their goals…” #CMC30 $$ Nov 15, 2012
• Plosser: “And in so doing, policymakers must acknowledge what policy can and cannot achieve.” $$ #CMC30 Nov 15, 2012
• Plosser: “The first principle is to be clear and explicit about the goals and objectives of policy.” #CMC30 $$ Nov 15, 2012
• Plosser: “I believe sound and effective central banking should focus on 4 guiding principles.” $$ #CMC30 Nov 15, 2012
• Plosser: “Moreover, it is unlikely that regulatory reform as embodied in Dodd-Frank has substantially addressed the TBTF problem.” #CMC30 $$ Nov 15, 2012
• Plosser: “The ability of monetary policy to influence employment has long been recognized as tenuous at best.” $$ #CMC30 Nov 15, 2012
• Plosser: “It is very hard to quantify the risks associated with our unconventional policies. But they are real.” $$ #CMC30 Nov 15, 2012
• Plosser: Blurring the boundaries between monetary & fiscal policies can pose institutional risks 4the central bank & its independence #CMC30 Nov 15, 2012
• Plosser: “Moreover, it is difficult to identify the appropriate moment to begin tightening policy, even in the best of times.” #CMC30 $$ Nov 15, 2012
• Plosser: “Yet, history tells us that central banks tend to find it easier to lower interest rates than to raise them.” #CMC30 $$ Nov 15, 2012
• RT @PhilFedComDev: Read Plosser?s speech: ?Good Intentions in the Short Term with Risky Consequences for the Long Term.? #CMC30 http://t … Nov 15, 2012
• Chen: “Rise of the individual in China.” McDonald’s in China originated “I’m loving it.” #CMC30 $$ Nov 15, 2012
• Huang: Being a reserve currency lowers trading costs, lends prestige. Serves as a “Trojan Horse” for reform in China. Seiniorage. #CMC30 $$ Nov 15, 2012
• Huang: 400 years ago, China was a reserve currency with 30% share of Gross World Product. $$ #CMC30 Nov 15, 2012
• Schwartz: Monetary must be rules-based because we don’t really understand what monetary policy does in the intermediate-term #CMC30 $$ Nov 15, 2012
• Schwartz: Debt Intolerance: Debt> 90% GDP in developed countries. 60% in emerging markets. Spain at 90%+ in 2013. #CMC30 $$ Nov 15, 2012
• Schwartz: Quasi-gold standard — ECB was supposed to be independent. No exploiting money illusion. No devaluation. No excessive debt. #CMC30 Nov 15, 2012
• Wolfgang M?nchau: Fundamental problem of Eurozone: No bailout, no default, no exit (inconsistent). #CMC30 $$ Nov 15, 2012
• Stark: Crisis policies not well thought out, ad hoc, reactive, leaves too much to the ECB to do, too little done by govts #CMC30 $$ Nov 15, 2012
• Stark: Countries did not get the practical impacts of sharing a currency. $$ #CMC30 Nov 15, 2012
• Stark: Some countries were allowed to join the Euro who really were not qualified. Rules were not upheld. #CMC30 $$ Nov 15, 2012
• Stark: ECB will ride to the rescue of European Governments. This is not a sustainable policy. Adjustments need to take place. #CMC30 $$ Nov 15, 2012
• O’Grady: Opens by saying that the Euro was started with good intentions. (DM: low praise that it was not designed to fail.) #CMC30 $$ Nov 15, 2012
• Taylor: Dual mandate came in when monetary policy was way too loose, and inflation high. Leads 2 2 much discretion in monetary policy #CMC30 Nov 15, 2012
• Taylor: Argues that the policy of promising to hold Fed funds low to 2015 inconsistent with where the Taylor rule would indicate #CMC30 $$ Nov 15, 2012
• Taylor: Argues that Fed funds were too low for too long 2003-2004, and that regulatory rules were not enforced. Partially blames GSEs #CMC30 Nov 15, 2012
• Taylor: Last 30 years — 1982-2002 good monetary policy, in his opinion. 2002-2012 bad monetary policy. $$ #CMC30 Nov 15, 2012
• Warsh: Fed is a price-maker, not a price-taker, affects risk-free rate, & it affects the pricing of all assets, distorting investment #CMC30 Nov 15, 2012
• Malpass: Capital allocation is getting warped by the Fed, leading to higher prices for gold and corporate bonds, mortgage bonds, etc. #CMC30 Nov 15, 2012
• Malpass: Fed is sucking duration out of the fixed income markets more rapidly than the Treasury is issuing. $$ #CMC30 Nov 15, 2012
• Malpass: The Fed is a giant, heavily leveraged SIV, borrowing short and lending long, w/only $55B of equity capital. #CMC30 $$ Nov 15, 2012
• O’Driscoll: Failure to forecast the Great Recession lessens the legitimacy of the Fed to engage in discretionary policy. #CMC30 $$ Nov 15, 2012
• Warsh: Price stability should b the main mandate. Maximizing sustainable employment is important, but outside the remit of the Fed #CMC30 $$ Nov 15, 2012
• Warsh: Communications matter, but they are not everything. What the Fed does is more important than what the Fed says. #CMC30 $$ Nov 15, 2012
• Warsh: Argues that 2008 was a panic and Fed actions were justified. Today, that’s not so, where monetary policy is weak. #CMC30 $$ Nov 15, 2012
• Warsh: Diminishing returns to monetary policy. Monetary policy can be really strong at some moments, and very weak in others. #CMC30 $$ Nov 15, 2012
• Poole: Current economic problems are not monetary in nature. ECB has violated or circumvented many strictures in its charter. #CMC30 $$ Nov 15, 2012
• Poole: QE2 was a mistake — there were already excess reserves at the banks. $$ #CMC30 Additional reserves will not solve the problem Nov 15, 2012
• I asked my question on asset-liability mismatch — Hoenig: the answer was the usual that you can’t end maturity transformation #CMC30 $$ Nov 15, 2012
• @ToddSullivan Hoenig: Misguided, too complex, need simpler regs and more discretion for regulators #CMC30 $$ Nov 15, 2012
• Hoenig: Unlimited liability would be good, but you will politically never get there. #CMC30 $$ Nov 15, 2012
• Hoenig: Need to rethink the capital approach. Dump Basel. Simplify, it is too easy to game. Need a simple tangible capital ratio #CMC30 $$ Nov 15, 2012
• Thomas Hoenig suggests that we are sowing the seeds of the next financial crisis #CMC30 $$ Says we should be skeptical of new regulations Nov 15, 2012
• Bernanke cut rates 8/2007-9/08 in the midst of a solvency problem as opposed 2a liquidity problem. Cutting rates wld/did not work $$ #CMC30 Nov 15, 2012
• If incomes do not grow to meet the need to finance incremental debts incurred, you set up a debt financing crisis. #CMC30 $$ Nov 15, 2012
• Vernon L. Smith, “Leverage cuts far deeper on the downside than on the upside.” #CMC30 $$ At the Cato Institute’s 30th Monetary Policy Conf Nov 15, 2012

 

US Politics

 

• Changing the Conventional Wisdom on Wall Street http://t.co/HzU13GRB Ideas 4 tough leaders 4the SEC. 2 more: @ritholtz & @reformedbroker $$ Nov 17, 2012
• Obama Said to Reject Request to Ease Corn-Based Ethanol Law http://t.co/9LWxZi2h Increases pollution too. Ag states win again $$ Nov 16, 2012
• What the New President Should Consider http://t.co/Ah99K6tx Paul Volcker tells us that we need to balance the budget & grow the economy $$ Nov 16, 2012
• Why Hispanics are Natural Democrats and what the GOP can do about it http://t.co/XKLbPPcq IMO the GOP can’t do much about it at all $$ Nov 14, 2012
• Receivership Does NOT End GSEs http://t.co/qrEbx3Di The current law forbids the receiver 2 “revoke, annul, or terminate the charter” $$ Nov 14, 2012
• 10 Leadership Lessons from Simpson Bowles http://t.co/6JC5CLzc 11. Everything must be on the table. Everything. Including Medicare & SS $$ Nov 14, 2012
• http://t.co/hxqRMzaG Series on economic “cliffs” in the world today. If US cliff only costs 1% of GDP, might b worth doing 2 balance bdgt $$ Nov 14, 2012

 

Credit Markets

 

• Do Junk-Bond Investors Have Garbage for Brains? http://t.co/ZYYvK1db Financial repression tempts investors 2 take underpriced risks $$ Nov 16, 2012
• ‘Junk’ Bonds Sing Postelection Blues http://t.co/Rf4isEqO Room 2b constructive here, cash flow is adequate 2 service most HY now $$ Nov 16, 2012
• BlackRock?s Junk-Bond ETF Has Record Withdrawals as Rally Fades http://t.co/C79GC6Gl Poster child 4 the current risky debt panic $$ Nov 14, 2012
• Credit-Fueled U.S. Car Sales May Need Help From Incomes http://t.co/0iRq46j1 Been here b4; can incomes cover debt pmts w/room 4 error? $$ Nov 14, 2012

 

China

 

• Pettis’ articles at the WSJ http://t.co/yS8vQMi3 & http://t.co/c78EI02P & at Foreign Policy http://t.co/8lNMbOUV Tough change $$ Nov 16, 2012
• Xi Inherits an Economy That Needs Work http://t.co/bhS5DaC7 A decade of malinvestment should give way 2 a free economy, but it won’t $$ Nov 13, 2012
• Examining China?s ?Shadow Stimulus? http://t.co/6Rv7HHGZ Avoid Chinese wealth management products, they are likely 2b Ponzi schemes $$ Nov 13, 2012
• Wary of Future, Professionals Leave China in Record Numbers http://t.co/0pI04Bso Let them come 2 America! Throw the doors open 4 them! $$ Nov 13, 2012

 

Eurozone

 

• Pettis on Spain: “Given how rapidly the political environment is deteriorating, I have little doubt it will leave the euro.” $$ Nov 16, 2012
• Multinationals Find Loopholes Galore in Europe http://t.co/EZlRNNNY Wonder when the developed countries reconcile corporate tax policy? $$ Nov 16, 2012
• Europe Gives Greece 2 More Years to Reach Deficit Targets http://t.co/N34PPFWQ Extend & pretend, no way Greek Debt/GDP gets below 120% $$ Nov 13, 2012
• Ex-Goldman Bankers See Crisis Opportunity in Greek Insurance http://t.co/XvzZRWYE There may be value scouring the PIIGS for investments $$ Nov 13, 2012
• Rajoy Aims to Stem Evictions as Suicide Darkens Crisis http://t.co/LdKVjUv5 Spain has it tough. Not much the government can do though $$ Nov 13, 2012
• EU budget talks collapse http://t.co/6SvZ6nrC Austerity works when the problems are small; when problems are big, inflation is the cure $$ Nov 13, 2012

 

Rest of the World|

 

• Funds Bet Against Japan Inc. http://t.co/6rIDALbP Hedge funds buy protection on the CDS of large Japanese companies, timing a problem $$ Nov 16, 2012
• Jordanians Protest Fuel-Subsidy Cut, Demand King?s Ouster http://t.co/hMdSsnrY When conditions r poor, even small changes lead 2 panic $$ Nov 16, 2012
• Japan Megabanks? $6.7 Billion Stock Losses May Spur Selloff http://t.co/gNOLmkuY Losses will b taken; banks disentangling from industry $$ Nov 15, 2012
• Canadians Aren?t Heeding Debt Warnings http://t.co/nv2Pbt9R Debts grow as low rates lead to overleverage in the Canadian economy $$ Nov 14, 2012
• US Conference Board fears Brics miracle over as world faces decade-long slump http://t.co/zXyjNdmU Overindebted world growth soggy $$ Nov 14, 2012
• Hedging China risks, Japanese firms turn to booming Southeast Asia http://t.co/mmiuBPGB Japan spreads its manufacturing risk 2 new places $$ Nov 14, 2012
• http://t.co/OtaZcRhc How are debt levels in Israel? Are they catching the disease creeping up on Australia, Canada, & Sweden? $$ Nov 14, 2012
• Brazilian Stocks Squeezed by Rousseff as Valuations Increase http://t.co/PnNddJun This is why I have sold my Brazil holdings: Dilma $$ Nov 13, 2012

 

Companies

 

• SandRidge Investor Revolt Mounts Over ?Critical Failures? http://t.co/zSmC0YlK $SD mgmt bets natgas prices will rise relative 2 crude $$ Nov 16, 2012
• Twinkie Maker Hostess to Shut Down After Strike http://t.co/sAq4PrCb Delivers a sweet loss 2 all stakeholders, but Twinkies will return $$ Nov 16, 2012
• Amazon and the art of evasion http://t.co/0DA7kIgj You have to understand, at its heart, $AMZN is a nonprofit enterprise, killing many $$ Nov 15, 2012
• Goldman Using Technology to Become Wal-Mart of Wall Street http://t.co/h8pGuaSe Low cost wins in commoditized space, but machines err 2 Nov 14, 2012

 

Wrong

 

• http://t.co/cWlyHVR8 Too many neoclassical economists. They didn?t foresee the last crisis; how will they do better next time? $$ Nov 14, 2012
• Wrong: 6 Ways to Profit from the “New Saudi Arabia of Energy” http://t.co/md6bNR81 One stray misunderstood “fact” can do a lot of harm $$ Nov 13, 2012
• Wrong: Is the Insurance Industry Doing Enough to Address Climate Change? http://t.co/06gAsTgF Climate always changes; nothing has changed $$ Nov 13, 2012
• Wrong: ‘Baby Berkshire’ Leucadia matures with Jefferies deal http://t.co/HYo4f3MA $LUK does not have the cheap finance of $BRK.B $$ Nov 13, 2012

 

Other

 

• Federal deficit hits $120 billion in October; bad start to fiscal year http://t.co/Bo3TQqZx By 2017 Obama might triple debts of 2009 $$ Nov 14, 2012
• Public pension funds face vast shortfall http://t.co/R2qMQJe1 <- Summary article. Protections 4municipal bens-> http://t.co/xDkQKW8n $$ Nov 14, 2012
• Buffett company to close Va. newspaper, cut 105 jobs http://t.co/51FGQGE9 Small newspaper not far from DC; no reason 4 it to exist $$ Nov 14, 2012
• $BAC Offers to Buy $MBI Bonds to Block Amendment http://t.co/VTAeeIW0 $300M goes from stockholders to 5.7% bondholders $$ #poof Nov 13, 2012
• 5 money moves a post-bubble buyer is making now http://t.co/8HqPJRWe Main idea: buy what is despised now. Don’t take normal risks $$ Nov 13, 2012
• 10 things 401(k) plans won?t tell you http://t.co/o0VWXmim Main point is that average people are not good at managing pension assets $$ Nov 13, 2012
• New DNA Techniques End Mystery of What Ails Baby Patrick http://t.co/3SrJ9R7j Analyze DNA after an abnormal birth. 2nd order effects? $$ Nov 13, 2012

 

Replies

• @CJEHunt @euromoney Many thanks, Christopher. Remember that 1 fondly. Remember discussing theses w/ @Steve_Hanke @ Balt CFA mtg ~2000-1 $$ Nov 17, 2012
• @euromoney Thanks for the #FF . U did an article in 1998 that was prescient about troubles the Euro would have. Could I get a copy of it? Nov 16, 2012
• @BloombergView don’t know who to send this 2, but big disimprovement on the US bonds page on the BB web: http://t.co/2sJ5NEDK less data $$ Nov 16, 2012
• ‘ @TheCreditBubble Akre and Hawkshaw Nov 16, 2012
• @EddyElfenbein But it is not too much if it is a non-profit. After all, an absurd valuation is still absurd at double absurd. $$ Nov 15, 2012
• @researchpuzzler My mom used to say that 2 me, but positively because her parents were bright Nov 14, 2012
• . @ctindale @BlackRaven999 Eric Hovde used to say that. We don’t repeat our parents mistakes, we repeat those of our grandfathers $$ Nov 14, 2012
• @thinkingtrades I remember getting heckled writing pieces at RealMoney on the husing bubble 5/2005 & Subprime RMBS 11/2006 Can b forseen $$ Nov 14, 2012
• @BlackRaven999 @ctindale U r right that if they had an effective model, steps might b taken 2 avert a crisis. Tough 2 fight a boom though $$ Nov 14, 2012
• @ctindale @BlackRaven999 Used to work 4 a hedge fund that was predicting the crisis. Problem was we were 2 early. Made $$ at end though Nov 14, 2012
• @euromoney Yes, that is why in developed mkts. Also, the knock-on effects hit GDP more rapidly from a sell-off in bonds than equities $$ Nov 14, 2012
• @euromoney I worry about that too. Unintended consequences in the bond markets would b much more severe than in equity markets $$ Nov 14, 2012
• @felixsalmon & terminated in 12/2008: 10Y Tsy avgd 2.42% then… prob a good move in hindsight, though terminating 1yr earlier/later better Nov 14, 2012
• @felixsalmon This story says the swaps were put on in 2004: http://t.co/n3dWsLMF 10Y avgd 4.27% then. Nov 14, 2012
• @felixsalmon @jennablan They put on the swaps while he was President 2001-6, not enough data, but the 10Y avgd 4.40% over his Presidency $$ Nov 14, 2012
• @mickwe @BradErvin1 and thanks to both of you — I got 4 notes on this; I appreciate my readers. Nov 14, 2012
• @mickwe @BradErvin1 Mistake in pasting HTML that left code behind that was invisible in the editor, but visible once published. Fixed now Nov 14, 2012
• @PlanMaestro Maybe $MBI could offer to sell itself 2 $BAC, or offer a minority stake in the healthy sub in exchange 4 their consent $$ Nov 13, 2012

 

Retweets

• Will certainly turn out moist $$ RT @BarbarianCap: Bacon-wrapped Thanksgiving turkey. The American Eater wins again. http://t.co/Il1RaiET Nov 16, 2012
• Both RT @researchpuzzler: Q from @jasonzweigwsj: is it HY investors that are crazy or policymakers? http://t.co/hneJaRrq how about both? $$ Nov 16, 2012
• That tweet just fell on my head. Ow. RT @EddyElfenbein: So Newton was right. $AAPL does obey gravity. Nov 16, 2012
• Interesting CEF sorter, thanks RT @abnormalreturns: A big jump in the number of CEFs trading at a +15% discount. http://t.co/XORvF8eA $$ Nov 16, 2012
• You can say that again. Yahoo too $$ RT @gilaniali: If that use Gmail they should turn on two factor authentication. http://t.co/5YyAlYF2 Nov 16, 2012
• Cultural prob $$ RT @niubi: ?@ChinaGeeks: NEW 2NON POST: Why Rural Chinese Kids Don’t Go to College http://t.co/QEVlINtG the meritocracy… Nov 15, 2012
• RT @researchpuzzler: RT @DavidSchawel: One of the first days in a LONG time that the credit markets have shown some cracks – will be int … Nov 14, 2012
• War threats via Twitter. Twitter has arrived $$ RT @kept_simple: Until Obama RTs the IDF, how can we be certain he supports Israel? Nov 14, 2012
• The central point RT @ctindale: @BlackRaven999 it’s the central differentiator neo classical don’t factor in debt levels Nov 14, 2012
• Talking about dealer mkts $$ RT @moneyscience: Financial markets going through worst period in decades, says ICAP boss http://t.co/3haobsSa Nov 14, 2012
• Not surprised $$ RT @kaylatausche: BREAKING: House report released tomorrow to show decisions by Corzine led to #MFGlobal collapse. Nov 14, 2012
• Last year of 10Y Tsy: http://t.co/KisbqSMv RT @felixsalmon: Whoa, when did that happen? RT @jennablan: Oh, wow, 10-year now at 1.60% $$ Nov 14, 2012
• +1 😉 RT @ReformedBroker: .@LukeRussert doesn’t understand that for Nancy Pelosi to step down, someone from Kansas must drop a house on her Nov 14, 2012
• $$ Will kill us if Fed Chair RT @pdacosta: Fed’s Yellen says rates may need to stay near zero until early 2016 to forcefully lift employment Nov 13, 2012
• RT @joshuademasi: @AlephBlog “purpose of studying eco is not to acquire a set of answers to eco ?s, but to learn how to avoid being dece … Nov 14, 2012
• +1 RT @JonathanProber: @AlephBlog Perhaps many economists would agree we should try to become less reliant on economists in general? Nov 14, 2012
• RT @prchovanec: Funding of China’s investment-led growth is shifting from bank lending to alternatives promising higher returns on same … Nov 13, 2012

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Comments

• “How is $FB counted in this? IPO shares, shares unlocked, or total market cap?” ? David_Merkel http://t.co/TOX6vQuF $$ http://t.co/CyrvguQ8 Nov 16, 2012
• “Anything that can survive a nuclear war can certainly survive a mere bankruptcy!” ? David_Merkel http://t.co/l3KAxKo4 $$ cc: @danprimack Nov 16, 2012
• Three of my friends had their email accounts hacked today. Anybody else experience something similar? $$ Nov 16, 2012
• I track 76 13F filings — oddest thing of the qtr is that two of them sold everything down to only one long position. $$ Nov 16, 2012
• “I think you made the right decision, Tadas. All bloggers have to have sustainable lives, including you” Merkel http://t.co/yPaYpLj7 $$ Nov 15, 2012
• “You know things are tough in the Middle East when there r groups more extreme than Hamas” ? David_Merkel http://t.co/zKMtnAJs $$ Nov 15, 2012
• I think Buffett instructs whoever files the 13F for $BRK.B to make it as difficult as possible to import into Excel Nov 14, 2012
• Professional investors would be sad if retail left the mkt. Lucy would feel the same if Charlie Brown gave up trying to kick the football $$ Nov 14, 2012
• 13F filings are so much fun; so many ways to obscure the data Nov 14, 2012
• Carnage among levered CEFs that hold risky debt — many down 3%+ Nov 14, 2012
• After the hurricanes in 2004-5, ppl said it was global warming, just in time to get 6 low hurricane damage years. 1 storm creates panic $$ Nov 13, 2012
• “Though you are not new, of bloggers originating since 2009, you are my favorite.” ? David_Merkel http://t.co/PPw0N6SR $$ Nov 13, 2012