Lunchtime Links 6-26
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China Wants Super-Sovereign Currency (Reuters) Particularly ironic: “In thinly-veiled criticism of loose U.S. monetary and fiscal policies, the PBOC urged the International Monetary Fund to exercise closer supervision of the economic and financial policies of major reserve-issuing countries.” The Rubin/Summers/Geithner prescription delivered to Asia via IMF hammered those economies in the short-run, but helped stabilize them in the long run. It’s what we need now. Monetary and fiscal stimulus are counterproductive when in debt.
N.Y. Fed to Trim AIG Debt, Receive $25 billion stake in two subsidiaries (WaPo) CR puts it best: “The Fed is now in the insurance business.”
Many of Fed’s Alphabet Soup Rescue Facilities Get Extended (Fed) With rescue facilities, it’s easy to add but not so easy to subtract.
U.S. Savings Rate at Highest Point in 15 Years (NYT) Folks are saving their stimulus money, which is entirely rational. After-tax incomes are likely to fall in the not-so-distant future as government tries to pay back debt used to fund stimulus in the first place. It will be good to have some savings. One other comment: it’s remarkable that anyone would interpret this data as “bad for stocks.” Yeah, when spending falls, earnings are depressed. But investors should be thinking about the next few years, not the next few quarters. Long-run returns will be better once Americans have built up a cushion of savings.
Japan Deflating (BBC) Japanese consumer prices fell 1.1% in May. Kind of remarkable that after years of 0% interest rates mixed on occassion with quantitative easing, Japan has not had an inflation problem. But is this is an argument in favor of running the printing press to fight a recession? I fear not. Despite huge monetary stimulus, Japan is now closing out its second lost decade. So how much good has it done? The additional risk that we confront, as a huge net debtor nation, is that our lenders lose confidence in our currency.
700 NYC teachers paid to do nothing (Yahoo) Remember, the auto sector’s “Jobs Bank?” Apparently NYC has its own for teachers. And it costs taxpayers $65 million a year. What makes this one different, and more objectionable, is that these are teachers that were fired for cause, they aren’t assembly line workers that were simply laid off.
A Redacted Copy of the June FOMC Statement (Aleph Blog) David Merkel parses the Fed’s language.
The quiet Americans (Economist) “Employees are proving stoical in the face of pay cuts and compulsory unpaid leave.”
7 Cartoons from the Great Depression (Bearish News) The first one (below) is particularly relevant.