Salient to Investors: Caroline Baum writes: Bernanke deserves credit for stabilizing the economy during the financial crisis after failing to identity the implications of the subprime crisis. The US outperformed the rest of the world in large part because of the Fed’s aggressive monetary policies. The Wall Street Journal says
READ MORE... →Salient to Investors: Caroline Baum writes: C. Fred Bergsten says Sweden combines a social welfare society with a free-market economy and a high degree of government efficiency: nearly two-thirds of Swedes confirm by phone that the tax form prepared for them by authorities is correct. cards use your Michael McDonald
READ MORE... →Salient to Investors: Caroline Baum writes: Tapering seems fully priced into the market, and time is not on the Fed’s side. Vince Reinhart at Morgan Stanley said Fed officials have already paid a high price in terms of market volatility for showing their desire to end QE. Long-term interest
READ MORE... →Salient to Investors: Caroline Baum writes: The residential real-estate market has just got going and only in the last 2 years has residential investment contributed in any significant way to economic growth. July single-family housing starts of an annual rate of 591,000 is a long way from the peak of 1.8 million
READ MORE... →Salient to Investors: Caroline Baum writes: Arvind Krishnamurthy at Northwestern and Annette Vissing-Jorgensen at Berkeley found that Treasury purchases themselves have had limited beneficial spillovers to private borrowers, i.e. the Treasury was able to borrow at lower interest rates but not the rest of us. The researchers found that the
READ MORE... →Salient to Investors: Caroline Baum writes: Markets all along understood that tapering and raising the federal funds rate were two different animals. Central bankers have fallen in love with their own voices, and communication has become a policy tool. Benn Steil at the Council on Foreign Relations said new BoE
READ MORE... →Salient to Investors: Caroline Baum writes: The bad idea that the Fed could “fix” things faster with more inflation keeps popping up in academic circles: Kenneth Rogoff of Harvard in December 2008, followed by Greg Mankiw of Harvard, Olivier Blanchard at the IMF in 2010. Noah Smith advocates inflation of
READ MORE... →Salient to Investors: Caroline Baum writes: Paul Krugman at Princeton says Milton Friedman has virtually vanished from the policy discourse and a few decades from now, historians will regard him as little more than an economic footnote. I believe Krugman, not Friedman, will end up as the footnote. Krugman’s claim
READ MORE... →Salient to Investors: Caroline Baum writes: Health-care spending has collapsed in most developed nations, not just the US. But as more people get health insurance, the demand for medical care will go up, and with it the price. If Fed talk of tapering was enough to send 10-yr Treasury yields
READ MORE... →Salient to Investors: Caroline Baum writes: Obama is great when it comes to platitudes but less adept at outlining the policies needed to achieve those goals. Robert Litan at Bloomberg Government said Obama would like all employers to pay efficiency wages, but does not have an executive order to do that. It is individuals
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