My colleague Margie Fernandez flagged a research report from Oppenheimer on the ongoing Basel implementation. It has been calculated, through various methodologies, that the implementation of both Basel III and Dodd-Frank may be “upwards of 15% of operating profits of small banks.” Now it should be noted that these figures were derived from a meeting with Frank Keating, former governor [...]
Recently there has been a slight increase in interest over the money supply figures, particularly M1; nothing too major but some perceptible chatter. Going back in the weekly data, you find that the growth rate suddenly jumps in early February. For anyone searching for inflation, which includes practically the whole of the orthodoxy, this might seem like a sign of [...]
I could probably file this as Understanding Eurodollars, Part 4 as an extension of my earlier series on the subject, but, since this is intended more for analysis than discovery of the underlying dynamics, its seclusion is at least warranted. Because the eurodollar market is mostly a mystery, assuming people have heard of it at all, there is an assumption [...]
Given the relatively light holiday week, I thought it somewhat appropriate to finish the very heavy and systemic examination of the series on eurodollar markets (Part 1 here; Part 2 here). The preceding episodes were dedicated to the eurodollar system as it built up toward the 2007 reckoning. What started out as an alternative to the gold standard quickly morphed, [...]
The rapid growth of the eurodollar market made closing the gold window viable. Without an international mechanism to settle trade imbalances, there was no way to keep the dollar as a reserve currency. That is why SDR’s were first conceived, and funded, in the 1960’s. There was every intention to ditch the dollar and move to a single, global currency [...]
With the Federal Reserve’s taper summer having created “dollar” troubles throughout the known credit world, there is renewed interest in eurodollars and wholesale money. When the world previously took note in August 2007 (at least those that were paying attention) it was an introduction into modern banking. Gone are the days when banks took in currency (in the form of [...]
I have never liked the word “inflation” in any context. It is far too subjective despite the various ideological attachments that have been assigned. However, humans, as economic agents, perceive “inflation” and it has very real effects on economic decisions and performance, so it has to be accounted for in some way. Inflation in the conventional economics sense is narrowly [...]
Following up on the repo warning from two weeks ago, we have gotten confirmation in the form of repo fails. In the US treasury repo market, the primary liquidity conduit in the US dollar wholesale money, we have been seeing indications of dramatic shortages in available collateral for some time. It was first noted back in March in the week [...]
Banco Popolare, one of the 25 largest banks in Europe and one of Italy’s largest, was forced to inject “capital” into a subsidiary joint venture, Agos Ducato SpA. Losses have been mounting at Agos, a consumer lending conduit in Italy, for more than a year. The company is joint venture between Banco and French megabank, Credit Agricole. Banco had already [...]
First ECB head Mario Draghi hinted at discussions of an ABS plan at his press conference. Now we get word from Die Welt that not only is it more than a rumor, it has been discussed by the ECB’s governing council. The German paper also notes that it seems likely that the governing council is far more in favor than [...]
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