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Browsing Category
Monetary System
The Euro, Currency Sovereignty and Adopting a Foreign Currency
It is apparent that adoption of a foreign currency is equivalent to running a very tight fixed exchange rate regime. It provides the least policy space of any exchange rate regime. This does not necessarily mean that it is a bad policy. But…
March to Folly: Underestimating Germany and the ECB
The probability of a German-led fiscal union in Europe is greater than the consensus suspects given its arguments that only an ECB backstop and a European bond will prevent the end of the greater experiment. In addition, the argument is…
Time to Demand Transparency and Accountability of Our Public Stewards
When will we begin to reign-in the Fed and hold it accountable? And will we let the Fed bail-out Wall Street without Congressional approval of funding the next time it crashes? We need to answer these questions soon, because it is beginning…
The SEC’s Day in Court
Judge Jed S. Rakoff of the United States District Courts of the Southern District of New York struck a blow against the Securities and Exchange Commission and in support of the "public interest." The Securities and Exchange Commission had…
Full text: Moody’s reviews European banks’ subordinated, junior and Tier 3 debt for…
"While the need to preserve confidence may imply some continuing (though potentially declining) support for senior debt -- given the potential for contagion across the banking system -- the rationale for continuing to assume the willingness…
Sovereign Currency and Government Policy in an Open Economy
While the usual assumption is that current account deficits lead more-or-less directly to currency depreciation, the evidence for this effect is not clear-cut. Implications of this depend on the currency regime. According to the well-known…
FDIC-Insured Institutions Earned $35.3 Billion in The Third Quarter of 2011
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate profit of $35.3 billion in the third quarter of 2011, an $11.5 billion improvement from the $23.8 billion in net…
What’s underneath the TARP?
The GAO says that issues with the TARP are not “material” and chooses instead to go with the less damning term of “significant”. A three-year record of getting it wrong would seem to suggest otherwise. We get that the $470 billion TARP was…
Euro bank funding, collateral, and outlook
Bank borrowing from the ECB reach a new high for the year at today's 7-day repo operation. Banks borrowed 247.17 bln euros for a week at 1.25% fixed rate.
The key question is what are banks doing with those euros. The answer is that…