BoE & ECB Rate cuts today

Économiste Monétaire

silverharp wrote: »

Don't get me started on the savings glut. Re inflation targeting, I'll watch with interest which way it goes. Looking at the Irish situation, I cant see wage inflation being possible or real incomes rising, so at worst the ability of the consumer to consume will be reduced if prices are rising. Also I will be looking at inflation in the round, it really will not matter if the headline rate is 2% , if consumer wealth (property, stock market investments, pension fund assets) are dropping at a significantly higher rate. In the US the market will force consumers to cut back , the credit card market for instance looks ready to fall apart. interesting factoid, McDonalds became the 2nd biggest retailer for one of the credit card companies in the US, people are now borrowing to buy food?


will we get the alternative:D

Reserve Bank of Zimbabwe

http://www.rbz.co.zw/

Our Vision

To become the financial cornerstone around which Zimbabwe's economic fortunes and developmental aspirations are anchored.
Our Mission

The pursuit of the Bank's vision will express itself through leadership in the formulation, implementation and monitoring of policies and action plans for fighting inflation, stabilisation of the internal and external value of Zimbabwe's currency ....more>>

I'd wonder by how much the delinquency rates on credit cards have increased over the last year. There was that amusing statistic floating around of how many credit cards the average American holds (including store cards), I wonder what the true figure is, and the average credit limit on each card. It will definitely be worth watching specific monetary aggregates and CPIs over the next few months--one waits in trepidation.

The quote from Zimbabwe CB is quite funny; Our mission: Fighting Inflation. Comical, at best. Also, The Economist's front cover this week is about savings :P : Where have all your savings gone?

Time Magazine

book smarts wrote: »

It could be argued that much of economics in general "holds no ground in rational thought", as you say.

Like?

Economics is pseudo-science, at best, as discussed in that other thread.

I disagree. Most of the critiques proposed in that thread -- well, at least those that weren't contradictory -- challenged economists' ability to predict. This is entirely different to our ability to prescribe.

Look at the mess the Fed's policies have gotten the world into.

Which Fed policies? Are you mixing up the Fed with the Clinton administration?

Yet everyday these so-called "experts" appear on TV spouting jargon, when the truth is they haven't a clue.

I have yet to see a respected monetary economist appear on TV, shy of Ben Bernanke. Would you like to back up the assertion that they haven't a clue, or are you going to just leave it there unsupported?

If they know so much why can't they even decide what to do? They daren't admit it though, because their careers are on the line.:rolleyes:

Medical professionals often disagree about the best course of action for a patient. If they know so much why can't they even decide what to do? Whose career is on the line? Bernanke's? Something tells me he's not all that concerned about his career, given that he's a very wealthy man. I think he's far more concerned about how history will judge him, given that he's also a very reasonable man with a deep interest in history. Thus his incentives are to do the right thing. Why do you think his career is on the line? Do you doubt his ability to walk back into a professorship in any university in the world, given that he's one of the most-cited economists ever?

There was a recession in '01 but it wasn't proportional to the boom before it, they wouldnt let a proper one happen.

By embrace a recession I mean encourage saving and stop high credit spending, yes.

Your focus on capital rather than productivity is mis-guided.

silverharp

Économiste Monétaire wrote: »

I'd wonder by how much the delinquency rates on credit cards have increased over the last year.

I remember When I was looking at this over the summer, 2 shoes that I thought would drop were Credit card debt & commercial real estate debt. I havnt really looked these since in any detail

you can follow the developments below



Consumers' Credit Card Limits Slashed as Companies Try to Reduce Risk

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/15/AR2008111500216.html




American Express Delinquencies Hit 4.4%, Defaults 6.96%

http://www.bloomberg.com/apps/news?pid=20602007&sid=a.SS7_usmSqk&refer=govt_bonds

Économiste Monétaire

silverharp wrote: »

I remember When I was looking at this over the summer, 2 shoes that I thought would drop were Credit card debt & commercial real estate debt. I havnt really looked these since in any detail

you can follow the developments below



Consumers' Credit Card Limits Slashed as Companies Try to Reduce Risk

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/15/AR2008111500216.html




American Express Delinquencies Hit 4.4%, Defaults 6.96%

http://www.bloomberg.com/apps/news?pid=20602007&sid=a.SS7_usmSqk&refer=govt_bonds

Thanks for the links. I know the American Bankers Association keep numbers on delinquencies, the last ones for CCs I can find are Q2 2008:

Credit card delinquencies rose just three basis points during the second quarter ended June 30, to 4.54% of total loans from 4.51% in the previous quarter, according to a report by the American Bankers Association. The credit card delinquency rate was 4.39% for the second quarter of 2007. The association's report defines delinquencies as payments that are 30 days past due. The federal economic stimulus payments earlier this year likely are the reason for just a slight increase in the delinquency rate, according to James Chessen, the ABA association's chief economist. "Having that financial shot in the arm appears to have helped some Americans pay off debt during the second quarter of 2008," Chessen says of the report's findings. "Borrowers are also being more cautious in adding to their overall debt, which is prudent in the face of a slowing economy," he adds. The composite ratio, which tracks eight closed-end installment-loan categories, such as credit card, auto and home-equity loans, rose six basis points, to 2.68% in the second quarter from 2.62% in the first previous quarter. The association attributes that increase largely to home-equity loan delinquencies, which jumped 22 basis points, to 2.56% from 2.34%.

I'm trying to find the more recent ones in full--it's difficult to wade through the ABA's banking journal junk, they usually give a concise version of their larger consumer credit delinquency bulletin, if I recall correctly.

silverharp

this is an extract fro Mark Fabers newsletter , take it at face value.


A friend of ours recently sent us the
following comment from Dr. G. Gono, chairman of the Reserve Bank
of Zimbabwe (no hoax):
"As Monetary Authorities, we have been humbled and have taken heart in
the realization that some leading Central Banks, including those in the
USA and the UK, are now not just talking of, but also actually
implementing flexible and pragmatic central bank support programmes
where these are deemed necessary in their National interests.
...That is precisely the path that we began over 4 years ago in pursuit
of our national interest and we have not wavered on that critical path
despite the untold misunderstanding, vilification, and demonization
we have endured from across the political divide.
...Here in Zimbabwe we had our near-bank failures a few years ago and
we responded by providing the affected Banks with the Troubled Bank
Fund (TBF) for which we were heavily criticized even by some multilateral
institutions who today are silent when the Central Banks of UK
and USA are going the same way and doing the same thing under very
similar circumstances thereby continuing the unfortunate hypocrisy that
what's good for goose is not good for the gander.
...As Monetary Authorities, we commend those of our peers, the world
over, who have now seen the light on the need for the adoption of flexible
and practical interventions and support to key sectors of the economy
when faced with unusual circumstances."

Économiste Monétaire

:eek: You know times are bad when the Zimbabwean CB is, in some small way, comparing their actions with the ECB's and the Fed's. Troubled Bank Fund = Monetizing the government's debt?

Digi_Tilmitt

The Economist wrote: »

Which Fed policies? Are you mixing up the Fed with the Clinton administration?

What do you mean by this? I would argue that the primary cause of the current crisis was interest rates that were too low for far too long which spurred an asset price bubble.

I find it difficult to see how you could connect the Clinton administration to current issues. In my own opinion that administration was a bastion of fiscal responsibility. They raised taxes and cut spending and were targeting paying off the USA's national debt by 2010.

The Economist wrote: »

Your focus on capital rather than productivity is mis-guided.

I believe his focus was against excess leverage and unsustainable debt

silverharp

Digi_Tilmitt wrote: »

I would argue that the primary cause of the current crisis was interest rates that were too low for far too long which spurred an asset price bubble.

where it gets interesting is the reasons why interest rates were artifically low

Time Magazine

Digi_Tilmitt wrote: »

What do you mean by this? I would argue that the primary cause of the current crisis was interest rates that were too low for far too long which spurred an asset price bubble.

That's far too simple an explanation. From what I can see, the main problem was one of agency: security systems were systematically played until they were no longer secure. This under-priced risk and led to a bubble.

I find it difficult to see how you could connect the Clinton administration to current issues. In my own opinion that administration was a bastion of fiscal responsibility. They raised taxes and cut spending and were targeting paying off the USA's national debt by 2010.

Pressuring a gigantic semi-state agency to provide mortgages to under-privileged families (i.e. sub-prime) is not being responsible. That said, neither was setting up Fannie and Freddie in the first place.

(And paying off national debt isn't necessarily such a great thing.)

I believe his focus was against excess leverage and unsustainable debt

Both of which relate to capital.