Credit Writedowns

People are now talking about a trade war. But How will Trump implement his tariff plan? Who will the targets be? How will they respond? What will the economic and political ramifications be? We simply don't know. There will be great…

In the next recession, muni bonds will be hit and local governments will default. The Fed will use Section 13(3) of the Federal Reserve Act to buy municipal paper. And if they need even more authority, Congress will grant it.

Increasing demand is key to growth in advanced economies. And that means higher wages are necessary. But the redistribution of national income toward capital over the past generation has undermined the capacity of ordinary households to…

Many US public sector pension funds are underfunded. This will impact local governments' solvency in the next downturn. It could also threaten the safety and security of the municipal bond market. So the Fed may end up playing a role.

Technological disruption promotes competition that benefits consumers. Yet, it also promotes an industrial organization that favors size. And that lessens competition.

The announcement of the US intention to impose tariffs on imported steel and aluminum on national security grounds has sent ripples through the capital markets.

The London Inter-Bank Offered Rate is an important benchmark for trillions of dollars of contracts.  The problem is that it was rigged. The Secured Overnight Financing Rate may be an interesting alternative.

A speech by Lael Brainard on economic headwinds turning to tailwinds suggests a regime shift is at hand at the Fed. Meanwhile, US President Trump is expected to announce tariffs on steel and aluminum. Mexico has already said it would…

The Fed as the monopoly supply of reserves can and will push the market until it cries uncle. Powell's testimony before Congress is the Fed Chairman's first warning shot. Caveat emptor.

Powell's testimony suggests the Fed will be more hawkish than the market expects. I believe long-term interest rates will grind higher. Look at the steepness of the yield curve for signs of over-tightening.