LyrArc Article Gist
Barbara Wesel of DW.com says 2017 will be a difficult year for the European Union. Elections will be held in the Netherlands, France, Germany, and possibly in Italy. The Netherlands election is coming up this month and the far right party led by Wilders is likely to gain as much as 25% of the vote but have to negotiate with other parties in a fractured parliament to form a government. Elections in France show Marie Le Pen winning the first round, with an uncertain result in the second round between Le Pen and Macron. A win by Le Pen could lead to the unwinding of the EU. In Germany another coalition government is expected with the SPD playing a larger role as it regains favor with the voters under the EU's Martin Schulz. Wesel says Germany and Merkel are looking like a beacon of stability and hope as the world looks for leadership with America looking inward to fix problems at home.

 

LyrArc Article Gist
The U.S. Federal Reserve released its new economic projections for GDP growth, inflation and unemployment in 2012-2014 and the decisions reached by the June 2012 Fed Open Market Committee (FOMC) meeting. This follows uncertainty in financial markets with the $125 billion rescue of Spanish banks by the EFSF, the eurozone rescue fund, and 10 year Spanish bond yields reaching 7% even after the rescue announcement. The Fed lowered all its forecasts to reflect the gloomier outlook. The "central tendency" is for the U.S. GDP to be in the range of 1.9%-2.4%, dropping it by 0.5% from the April forecast and 2013 forecast with a similiar drop to 2.2%-2.8%. 2014 GDP forecast is at 3.0-3.5% Inflation is forecast at 1.2%- 1.7% range, instead of 1.9%-2.0% for 2012 and is at 1.5%-2.0% for 2014. Unemployment is is forecast at 8.0%-8.2%, increasing by 0.2% for 2012 from the April forecast, and with a similar increase is at 7.5%-8.0% in 2013. Unemployment gradually declines to 7.0-7.7% in 2014. The decision reached by the FOMC is for the Fed to continue its program called Operation Twist to extend the average maturity of its balance sheet beyond June 2012....

LyrArc Article Gist
Germany holds the presidency of the G-20 in 2017. This provides chancellor Merkel an opportunity to provide German leadership on many issues. The ministerial conferences will lead to the summit in Hamburg in July 2017. Concern about the incoming Trump administration views on trade in international circles gives Germany and China a larger role in the meetings for 2017. Germany plans to put more focus on the real causes of migration and flight from poor countries and war zones.

LyrArc Article Gist
So much for political campaigning and talk of inflation, inflation comes in lower in September after DJT tariffs of 10-15% on EU, Japan and other trading partners. The higher tariffs on China are action needed to reduce trillion dollar trade deficits the world has with China, deficits that are economically destabilizing for the world economy, with supply chain concentration a serious problem. US inflation in September came in at 3.0 percent lower than expected.  One reason is that the headline numbers are high but in actual practice the tariffs are on average at 12.5% not 17% or 25% as headlines show. The tariffs vary by country and the US was careful to keep them at 10% for the EU and Britain and 15% for Japan, the key trading partners. China is an exception at 47% because it is US policy to reduce the world's 1 trillion trade deficit with China and cutting this is a major goal. For decades the US tried every possible way to bring it down to no avail till this effort with tariffs. Another is exceptions in products- for India this includes semiconductors, smartphones and pharmaceuticals. Another factor is that postpandemic inflation in 2021-2022 created higher profit margins in auto, retail and other sectors of the economy. As a result only 30-40% of the tariff gets passed onn to consumers. In autos only about 20% because buyers cannot afford the high prices. Some tariffs are still being negotiated and are a foreign policy tool to get India to stop funding Russia in the Ukraine war knowing that India was importing most of its oil from non-Russian sources till 2019. China is also funding Russia, that is true but the US can insist on exercising its leverage with Asian partners not China. With China the tariff on fentanyl and the overall 47% tariff- down from 57% after meetings in Busan, South Korea between Xi and DJT last month- shows the US takes the Chinese role in distorting world trade to its benefit seriously.  ...

LyrArc Article Gist
The terms of the debt restructuring deal with the bond swap in Greece become clear on March 9, 2012. In the deal with private bondholders -using collective action clauses to force remaining bondholders into the deal- about 96% of the 206 billion euros of Greece's bonds will be exchanged. Private bondholders held out throughout most of 2011, delaying the inevitable as Greece's economic situation became increasingly hopeless. This created a logjam with the German government, which insisted on serious private sector participation and bondholder haircut as the cost of poor lending decisions of the French, German and other European banks that made loans to Greece out of proportion of the ability of Greece to payback loans. Charles Dallara of the Institute of International Finance, negotiating for European banks, offered a 10% average loss on the bonds in July 2009. It was not until German Chancellor Merkel told Dallara at a late night meeting on October 27, 2011: "this is my last offer," for a 50% loss on the face value of the bonds, was agreement reached. The Greek debt swap that now takes place will give private bondholders a loss of 53.5% from the face value of 200 billion euros of bonds that they hold. The new Greek bonds issued in place of the old bonds include short-term bonds issued by the eurozone rescue fund at 15% of the face value of the old bonds, and a series of Greek bonds with maturity ranging from 11-30 years valued at 31.5% of the face value of old bonds. That even this 53.5% bondholder loss will not be adequate, as Greece's economy looks irretrievably damaged as it spirals downwards, is shown by the value of these bonds already trading in a hypothetical "gray market." The new 30 year bond is quoted at 17 cents and the 11 year bond at 22 cents. The questions remain about the stalling by the banks in taking the losses earlier- was this the wisest move considering the losses beyond Greece as the eurozone economy as a whole has suffered from the prolonged negotiations stretching through 2011, lurching from one crisis to the next? Even if the stalling was designed to give time for banks to repair their balance sheets, was this the best strategy, considering the damage inflicted on European economic growth. John Taylor of Stanford points out that the European banks delayed the unavoidable serious debt restructuring for too long, when insolvency was the real issue not illiquidity, and exaggerated the effect of contagion from the beginning- in John Taylor, WSJ, 2/22/2012, A Better Grecian Bailout. And John Cochrane of the University of Chicago, points out that French and German governments if they bailout French and German banks should do so openly and frankly rather than cover this up as bailouts of countries, because this would lead to serious questions about the poor lending decisions of the European banks and government supervision of the banks- in Cochrane, WSJ, 12/2/2010, 'Contagion' and other Euro Myths. As early as Feb. 2010, Cochrane was suggesting the forced exchange of new bonds with long debt maturities for exisiting bonds with short debt maturities, as short term debt was the major issue here. ...

LyrArc Article Gist
Lawyers Buchheit and and Gulati help Greece design a legal agreement that writes in a new collective action clause. The collective action clause ensures a 95% participation for the bond restructuring deal Greece is doing in March 2012 to cut its debt to sustainable levels. A similiar deal could be designed for Portugal says Mitu Gulati, a law professor at Duke University. Because Greece's bonds are written under Greek law, writing in a new collective action clause is a legal mechanism for achieving a meaningful debt reduction and bond restructuring deal- this is something Gulati and Buchheit figured out because of their expertise in this field. A joint paper by Buchheit and Gulati in 2010, first explored the way in which private bondholders of Greek bonds who reject a bond debt restructuring could be forced to accept the same losses as other investors who accepted the deal. They are now advisors to the government of Greece. In early 2011 there was serious discussion that the Brady Bonds debt restructuring for Latin American debt of Argentina, Mexico and Brazil of the 1980's, under which private investors traded in their old bonds for new bonds with longer duration at reduced interest rates and lower value- reflecting voluntary losses accepted by bondholders- was the approach needed for Greece, Portugal, Ireland and other eurozone countries. Then U.S. Treasury Secretary Nicholas Brady took the lead- in Landon Thomas Jr., NYT, 11/30/2010. Bondholders held out throughout this period, with Charles Dallara, one of the architects of the Brady bonds restructuring, hired by European banks to negotiate on their behalf. It was only when German Chancellor Merkel delivered an ultimatum by telling Dallara "this is the last offer," during a late night meeting on Oct. 27, 2011, at EU headquarters in Brussels, was an agreement reached on serious debt reduction- in Walker, Forelle, Meichtry, WSJ, 12/30/2011. The long delay meant a worsening crisis in Greece and the rest of the eurozone. ...

LyrArc Article Gist
Discussion at a U.S. Fed meeting in Jan 28-29, 2014, as revealed in the minutes for that meeting. It shows Fed officials such as Bullard of the St Louis Fed asked for a debate on interest rates, but most Fed oficials at the meeting including Lockhart of the Atlanta Fed, supported current tapering policy to wind down bond purchases buy the end of 2014. Some of the discussion went to how fast the unemployment rate had declined from 7.9% to the 6.5% threshold set by the Fed, and what this meant as other signs show weakness in the U.S. economy. The drop in the unemployment rate reflected more older workers retiring and to an unusual degree discouraged workers dropping out and not looking for work. Should the Fed put more weight on inflation and financial stability some officials argued, especially as inflation was still about a percentage point below the 2% target by some estimates.

LyrArc Article Gist
A German reporter questions the value of the G20 meetings following the violence on streets at the last Hamburg meeting. He says the first G20 during the global financial crisis was useful but later meetings have not lived up to the hope for discussion and search for solutions to world problems. Global trade is at the top of the agenda following the tariffs dispute between China and the U.S. Divergent interests of participants are a problem. Would going back to G-7 in private meetings be a solution asks this reporter.

LyrArc Article Gist
Wall Street Journal reporters Walker in Berlin, Forelle in Brussels, and Meichtry in Rome, reconstruct the events during critical days after the indecision and failure to reach agreement during the July summit of eurozone countries. This took the form of intervews with leading players and over 25 policy makers. What emerges are accounts of how Germany's Angela Merkel, daughter of a Lutheran pastor, and protege of Eurozone founder, former German chancellor Helmut Kohl, handled the crisis. Merkel was widely criticized in the media for indecision. What emerges is an account of a leader who took decisive action at key moments in the crisis- leading to the formation of new governments in Greece and Italy taking action to improve finances, and negotiations with banks represented by the International Finance Corporation leading to acceptance by banks of a 50% loss on loans to Greece to reduce Greece's unsustainable debt burden. Merkel also worked with the European Central Bank's departing president Frenchman Claude Trichet and new president Italian Mario Draghi to resist French president Sarkozy's efforts to have the ECB assume responsibility for the crisis through large scale buying of Italian and Spanish bonds; which was opposed by German public opinion as a backdoor way of having German taxpayers assume responsibility for European debt. Shown are three critical moments when Merkel intervened. In October 2011, after Italian prime minister Berlusconi reneged on promises to make pension and other reforms to improve Italian finances because of political resistance. He survived a parliamentary no-confidence vote by one vote. Merkel took the lead on October 20, by directly calling Italian President Georgio Napolitano on the phone, to urge him to take action for forming a new government in Italy. The result was Napolitano talking with all political parties to form a new government, leading to the formation of a government by a non-political figure respected in Italy, former EU commissioner Mario Monti. A day earlier, on October 19, French President Sarkozy met ECB president, Trichet, at an event honoring him as departing ECB president in Frankfurt's Alte Oper concert hall. Trichet, Merkel and Sarkozy met in a side room. Sarkozy asked for decisive help from the ECB for large scale buying of Italian and Spanish bonds to lower yields, which had reached 7% on Italian bonds. Trichet responded that the ECB's charter did not allow it to finance governments, with the meeting ending in a shouting match between the two leaders. On October 21, EU and IMF inspectors warned that Greece's debt was reaching unsustainable proportions and austerity measures alone would not work, unless the bondholders, the European banks, took losses of 60% on their excessive lending to Greece. At this point France agreed to the German position arguing for this level of bondholder haircuts or losses, fearing the prospect of large future bailouts that would jeopardize France's triple AAA credit rating. The July 2011 summit accord had only provided for 10% in losses for bondholders. On October 27, at a meeting that went past midnight, Merkel and Sarkozy called IIF head Charles Dallara, who headed negotiating for the banks, to EU headquarters in Brussels. Merkel handed Dallara an agreement containing the 50% bondholder loss demand, and told Dallara- "This is the last offer." Merkel was saying banks would be left with nothing if they rejected it and Greece defaulted. Dallara called bankers and the IIF accepted Merkel's agreement. The final moment that October came on October 31, when Greece's prime minister Papandreou said he would call a referendum on the bailout provisions and austerity measures demanded by the IMF, the EU and the ECB. Bond markets reacted negatively to the announcement fearing a rejection and a Greek default. The Group of 20 leaders was meeting in Cannes, France on Nov. 2, 2011. Papandreou was asked to come to Cannes for a pre-summit meeting. Here Merkel told Papandreou- "the real question" for the referendum was, "Do you want to be in the euro, or not?" Days later Papandreou, lacking support in Greece from political parties and opposition inside his party, submitted his resignation. A non-political figure respected in Greece, former ECB vice president, Lucas Papademos, was appointed prime minister to head a Unity government. Polls after the appointment showed three fourths of Greeks said that this was "a positive step for Greece," with Papandreou's party getting only 11% support and the opposition led by Samaras about 20%. The criticism leveled at Merkel is that Germany should take responsibility for debt throughout the euro area through the issuance of eurozone bonds or the ECB buying large amount of bonds of Spain and Italy. Merkel faced strong opposition inside Germany and from the Bundesbank to this idea. The other criticism was based on austerity measures worsening the finances of Greece because of a lack of growth in the economy, which is true; yet Germany may see the situation in Greece as taking a long time to be resolved in any event because of excessive and faulty financial management. For Italy and Spain putting finances in order was a necessity, and austerity measures should lead to short term sacrifice but improve prospects for the long term by returning the economies to growth. Another criticism is the installation of governments that lack popular or electoral support. As the polls in Greece showed the Unity government there has far greater support and public opinion blames the politicians for the huge mess. In Italy, Berlusconi was widely seen as losing popular support when he resigned. And in Spain Mariano Rajoy, the newly elected prime minister, was elected with a huge majority in parliament following winning in local government elections. Merkel also held her own party, the Chrisitian Democrats together at the recent Leipzig convention. Mario Draghi, was elected with German support to head the European Central Bank. He has long argued for better management of Italian finances as head of Italy's central bank. Draghi was able to support Merkel with carefully planned and managed actions. First to reduce interest rates to support economic growth in a slowing eurozone. Following this with the ECB's Long Term Financing Operation in late December 2011, to provide unlimited loans to European banks at 1% interest for three years in exchange for a broadened list of collateral deposited at the ECB. In a final twist in this drama, Charles Dallara, who was a key negotiator for the U.S. Treasury in setting up the Brady Bonds- that converted bad Latin American government debt owed to U.S. banks in the 1980's into long term debt with large reductions in principal owed and lower interest rates. This was in exchange for guaranteed repayment with 30 year U.S. zero coupon bonds. Dallara was now a negotiator for the banks to reduce the chance of the very same bondholder haircuts that he had negotiated in an earlier period to solve the Latin American debt crisis. Other players in the drama were Axel Weber, head of the Bundesbank, Germany's central bank, who resigned after strong and outspoken opposition to the ECB's large scale purchase of bonds of Greece, Italy and Spain. Jens Weidmann, his protege, who replaced him. And Jurgen Stark, German representative at the ECB, who also resigned in opposition to Germany assuming responsibility for eurozone debt. ...

LyrArc Article Gist
One has to separate the posturing and the rhetoric from the true positions of the parties to difficult negotiations between the ECB, IMF, EU, and the Syriza government in Greece. French opinion is reflected in the comments by Finance minister Michel Sapin, who said to reporters in Brussels- "If this government was elected, it's also because Greece has lost 25% of its national wealth in the space of 5 years." The government in Greece needs the 7 billion euro payment from the EU as the last instalment in the bailout package. France's Hollande government and the Renzi government in Italy favor growth measures over the austerity path advocated by Germany. The IMF's Christine Lagarde, a former French finance minister, was quick to differentiate between reforms such as tax collection, which is weak in Greece, with austerity opposed by the Syriza government. Lagarde told the newspaper Le Monde that the reforms on tax collection are not austerity, and need to be done. The IMF has 2.5 billion euro loan due in March, 2015. Debt is also owed to the ECB by July 2015. The ECB holds about $25 billion in Greek government debt. ECB president Draghi announced a 1 trillion euro government bond buying program in Jan. 2015 with a portion of the bond buying and risks to be borne by the ECB. The ECB could help the negotiations by stepping in to buy Greek bonds. A lot depends on the flexibility shown by both sides as the hard work of negotiating a solution on debt relief and structural reforms in Greece- such as the tax collection mentioned by Lagarde- progresses. Because of the deflation facing the eurozone, and economic uncertainty, the huge bond buying effort by the ECB to improve economic conditions, the positions of the EU and the ECB are likely to favor a toning down of the sharp rhetoric during the early days of the Greece crisis in 2011-2012. This would avoid adding additional economic uncertainty to the situation facing the eurozone. Tsipras and Syriza would seek to move to the centre in their positions based on discussions held earlier in meetings between the EU, the ECB and Tsipras before the elections....

LyrArc Article Gist
Italy raised 18 billion euros in a record auction on Oct. 18, 2012, meeting its needs for the rest of the year. Italy's yield dropped to 4.64% on Oct 18. Spain raised 4.6 billion euros at 5.32%. Italy sold most of the BTP Italia bonds to Italian citizens with a 4 year bond linked to Italian inflation and designed for Italian retail investors with a new eBay type internet platform, including a loyalty premium of extra 40 basis points. Italian retail investors have 8 trillion euros in net private wealth and household wealth in Italy is more than 4 times the sovereign debt, according to the Bank of Italy. This is a big difference compared to Spain, because the interest on the bonds remains in Italy for consumption and investment. Spanish households are highly indebted after the housing bubble.

LyrArc Article Gist
An account by Journal reporters based on over 25 interviews with eurozone policymakers shows how the central players in the eurozone drama acted to defend their national interests during the period April to July 2011. On one side France's president Sarkozy, Frenchman Claude Trichet at the European Central Bank, arguing in favor of the banks not to take bondholder losses or haircuts on loans made to Greece. On the other side the Bundesbanks Axel Weber, and Jens Weidman, Jurgen Stark and German Finance Minister Schauble. The Germans argued strongly for bondholder losses to take responsibility for bad loan decisions by French and German banks. French banks had committed more loans to Greece than German banks and had more at stake. German public opinion was strongly against German taxpayers paying for the losses, making German politicians insistent that European banks take losses on their bad loan decisions, or Germany would not support additional loans to Greece. Throughout April to July the two sides were locked in an impasse. The French feared losses for their banks and a Lehman Brothers bankruptcy style situation. The Germans at the Bundesbank and the Finance Ministry were equally insistent. A July 2011 summit meeting did not settle the issue. The events not covered here from the July to the December summit of eurozone leaders resulted in bondholders taking 50% haircut on loans to Greece, reducing the debt burden in Greece after austerity measures led to popular protests. The French pushed hard for the ECB or the EFSF to be allowed to make large purchases of bonds of troubled eurozone countries in an effort to protect Spain and Italy from contagion through higher bond yields. The Netherlands and Finland supported Germany's position. German bankers Weber, Weidman at the Bundesbank and Finance Minister Schauble opposed large scale buying by the ECB of Italy's and Spain's bonds and Chancellor Merkel said about a common eurobond that "this is not going to happen." Governments changed in Greece, Italy, and Spain by Dec. 2011, which committed to austerity programs and spending cuts. Italian Mario Draghi was appointed with German support as new head of the ECB. In late December 2011 Draghi launched the Long Term Financing Operation for lending unlimited amounts at 1% for three year loans to European banks and relaxing the terms to accept government bonds and other debt as collateral for loans. The effect of this was to provide a large infusion of liquidity into the banking system in Europe and drastically bring down the yields on bonds issued by Italy and Spain....

LyrArc Article Gist
Russian economy is faltering under the strain of the global financial crisis. The stock market is plunging, with the RTS Index down 19% on October 6, 2008, and the market down 60% since the high in May, 2008. Construction spending is winding down. Th economy growth rate was 8.1% in 2007 but its slipping. If oil prices hit $50 and they were already at $78 on October 10, 2008, then says Anders Aslund at the Peterson Institute for International Economics in Washington, there will be a sharp decline in the growth rate. Moscow analysts say the growth rate could drop to 4%. For Americans Russia may seem remote excpt for investors. But in a global economy there are connections to emerging markets and Russia is one big emerging market, next to China, India and Brazil. When General Motors shares dropped 31% and Ford's 22% on one day on October 9, 2008, the news that spooked the markets was ofcourse a credit watch and questions about liquidity from Standard and Poors rating agency, but alsoimportant was that the one bright spot for GM and Ford in Europe and in Russia in particular was disappearing as GM sales declined in Europe and in Russia. In the prior 12 months GM had seen sales jump by 40% in Russia giving it 10% of a car market that passed Germany recently as the largest car market in Europe. Couple of important things about Russia. Russians today are big spenders, savings are small and Russians do not trust their banks so bank deposits are very low. Household deposits are equivalent of 17% of GDP, compared with 45% in the USA. Only 4% of Russians trust commercial banks according to a poll by National Financial Research Agency in Moscow. So Russia depends on the outside world for much odf the cash flowing through its financial system. Foreigners purchased two thirds of the $170 billion in bonds isued by Russian companies and foreign banks put up half of the accumulated $900 billion in bank loans including almost all longterm debt estimates Moscow investment bank Troika Dialog. With global credit markets in a lockdown mode Russia is simply running short of cash. The government has $560 billion in foreign exchange reserves from years of high oil prices plus $160 billion in two sovereign wealth funds with most of this money in fixed income securities abroad as a rainy day cushion should oil prices tumble. On October 7 the governmet announced $36 billion in emergency loans to Russian banks following earlier pledges in September of $150 billion in loans and relief for Russian companies in danger of defaulting on international debts. One danger here is that about 55% of outstanding corporate loan are of maturity less than 1 year. One of Russia's largest developers Mirax Group is putting 50 projects on hold as bank financing for developers has almost ceased. On the other hand Russia's financial sector is relatively small and the credit crisis cannot hurt Russia as much as it will USA ad Europe. Bank loans account for 10% of corporate finance and the bond market is only a decade old, so about half of all capital investment by companies comes from retained earnings. And Russia has huge needs for investments in infrastructure after years of underinvestment, a stable political structure, an educated workforce, and an economy that is just getting started. As Secretary Paulson answered questions after the G7 meeting October 10, this was another point on the minds of the secretary and questoners, the hope that emerging markets like Russia, India, and China would continue to grow though slower than before, even as the US and Europe slipped into a long recession, and provide a little cushion to the global economy....

LyrArc Article Gist
Alan Mulally focussed attention on Ford brands such as the Taurus, and the Fusion, to improve quality and fuel efficiency. To do this he sold brands acquired earlier- Land Rover to Tata Motors and Volvo to Geely. Under his management Ford pushed ahead with globalized product development and building a presence in the small car market. Ford still has weakness in the European and Asian markets. In Europe a large number of manufacturers are competing for a slow growing market and price competition has cut into profits. In Asia, Ford was slow to enter the Chinese market. As a result its sales in China lag far behind VW and GM, with only 2.7% market share. Mullaly is investing $1.5 billion on new factories in China, including two assembly plants and an engine plant. One of the plants in the southern city of Chongquing will produce an SUV and a luxury car. Mulally wants to see 70% of Ford's growth in this decade from Asia. The other problem facing Mulally is reviving the Lincoln brand which has seen a sales decline of 63% since 1990. Ford has hired a designer who worked on the Cadillac to redo the Lincoln's design. Mulally plans to cut the 900 Lincoln dealers to 600, to reduce the price competition for smaller sales volume. He is asking the remaining dealers to invest $2 million for new showrooms that will compete with Lexus in their look and feel. Asessing what has been achieved at Ford so far one sees the progress in pushing up quality. Ford now ranks above Toyota in J.D. Power quality surveys with its cars getting higher resale prices than some Toyota models. Ford cars are also being well received by new car buyers with market share up for the second consecutive year. This would have been unthinkable only a few years ago. Also significant is how Ford under Mulally's direction managed to make good use of the $23 billion loan secured in 2006, avoiding bankruptcy and turning the corner to profitable operations. Ford earned $6.6 billion in 2010, after losing $30 billion from 2006 to 2008. Ford's challenges going forward are how to sustain profitable growth, manage $19.1 billion in debt and a junk-bond credit rating, and maintain the momentum without reverting to a dependence solely on SUV's and larger vehicles for profits. Chairman Bill Ford is forthright about Ford's history of wasting opportunities during the good times- of "losing the plot in the good times." Mulally makes the same assessment at a November town hall meeting of 200 employees - Ford is good at crisis managment he says but then "forgets why we're here." For Mulally a bit of inspiration from Heny Ford himself counts, this being a poster from 1925 that hangs on the office walls, a Saturday Evening Post cover with the slogan: "Opening the highways to all mankind." Mullaly says looking at this makes him cry....

LyrArc Article Gist
Prof. Calomiris of Columbia University, says the U.S. Federal Reserve should increase the cash reserve requirement for U.S. banks to prevent a surge in inflation. He points out that excesss reserves at banks stand at about $1.5 trillion. He suggests the Fed should take early action to prevent a jump in lending and credit creation- a pattern seen in the past after several years of dampened credit and lending.

LyrArc Article Gist
The impact on ASEAN countries of the monetary expansion policy of the Bank of Japan, Japan's central bank, and the policies of the Abe administration. Infusion of new liquidity into Malaysia, Singapore, Indonesia, Thailand and Vietnam.

LyrArc Article Gist
Federal Reserve chairman Bernanke's move in January 2012 to announce detailed projections for interest rates for each of the 17 Fed Governors participating in policy meetings, is an effort to show that he operates by consensus. Names of the Fed Governors are not stated.This is a change from the Greenspan years at the Fed. Hilsenrath points to the research done by Alan Blinder of Princeton University, former Fed vice chairman, which shows group consensus based action works bettter. Another reason for this is the Fed's damaged credibility after the Greenspan years and the financial crisis of 2008, when the Fed operated under one dominant figure. An additional step taken by Bernanke is to move from the ad hoc type of policy decisions of the past decade to a longer term plan for unemployment and inflation goals. The Fed has set a 2% goal for inflation with some flexibility to reduce unemployment if it is too high. This gives businesses more information to plan ahead and improves Fed credibility....