Of course, financial conglomerates don't like this because if would expose more of the "smoke and mirror" earnings. And guess who may be coming to the rescue of the financial conglomerates?
The man who made his bones about the Great Depression in writing his Princeton thesis is losing his intestinal fortitude. In his paper he summarizes that FDR could have solved the the Great Depression if only they had inflated the currency more.
Federal Reserve Chairman Ben S. Bernanke said today that large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.
Even Bill Gross is becoming a skeptic of late telling listeners to diversify away from the U$D before the banks do.
As a consequence of this elevated level of borrowing, the ratio of federal debt held by the public to nominal GDP is likely to move up from about 40 percent before the onset of the financial crisis to about 70 percent in 2011.
JPMorgan Chase & Co. and American Express Co. were told they need to boost common equity, less than four weeks after being informed they had enough to withstand a deeper economic slump. Morgan Stanley was directed to raise more funds after already selling stock to cover its stress-test shortfall. One firm was told only yesterday, people with direct knowledge said.
The global financial crisis may morph into a second, equally virulent phase where borrowing costs rise again, hobbling an embryonic economic recovery, debilitating cash-strapped banks, and punishing investors all over again.
Bloomberg is reporting the Obama administration is considering stripping the SEC of some regulatory power and giving that oversight to the Federal Reserve.
The Obama administration may call for stripping the Securities and Exchange Commission of some of its powers under a regulatory reorganization that could be unveiled as soon as next week, people familiar with the matter said.
The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said.
John Taylor, former undersecretary of the Treasury under Bush, gave a speech which said the Fed must raise rates and reduce the money supply to avoid inflation.
What is most amusing if it was not so serious is Taylor turned our favorite phrase systemic risk onto the Federal Reserve's actions.
Indeed, a recent Wall Street Journal op-ed, again lays blame at the Federal Reserve (let's not name names but it begins with a Green and ends with Span).
Remember those strolls down Maiden Lane: here and here. Well, the Fed just announced today that it has lost a combined additional $10 billion from Maiden Lane II and III - these are the AIG counterparty bailouts.
Ryan Grimm @ Huffpo has what should be considered an unbelievable article about the Inspector General in charge of overseeing and auditing the Federal Reserve. However, given the bizarro financial world we are living in, unbelievable has lost its meaning. The look on Congressman Alan Grayson's face says it all.
You read it right, a negative 5% interest rate. The financial times is reporting an internal study by the Federal reserve came to this conclusion:
The ideal interest rate for the US economy in current conditions would be minus 5 per cent, according to internal analysis prepared for the Federal Reserve’s last policy meeting.
The analysis was based on a so-called Taylor-rule approach that estimates an appropriate interest rate based on unemployment and inflation.
A central bank cannot cut interest rates below zero. However, the staff research suggests the Fed should maintain unconventional policies that provide stimulus roughly equivalent to an interest rate of minus 5 per cent.
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