China’s fiscal stimulus doesn’t necessarily mean that it will stop buying Treasuries
“So why am I not worried? Because not everything else is equal.
China has proposed a significant (or so I hope, the amount of new money in the announcement still isn’t clear – and some reports suggest that new spending could be as little as ¼ of the $585 “headline” announcement) fiscal stimulus because domestic activity in China is slowing. If China’s firms are investing less and Chinese households are saving as much China’s government can run a larger fiscal deficit without cutting into its purchases of US Treasuries.”
RW: Beautifully said, Brad! Uh-hem, general equilibrium.
“I will report to you that I believe it is FAR more pleasant to have visited Europe after the election of Barack Obama than it is before. There are two headlines that leapt out at me from the newstands covered with Obamamania of one sort or another. One was from a British paper, and simply said: “THANKS, YANKS.” The other was also in English, but looked local. It said: “Welcome back, America.””
RW: So now is a good time to go to Europe – the $US is strong AND Europeans respect us? Thanks Bing; love your stuff.
Fed’s Kohn: Officials Ready to Take More Steps
“Federal Reserve Vice Chairman Donald Kohn on Wednesday left the door open to further steps by officials to support financial markets and the economy. Central banks have already taken “forceful and innovative measures” to rebuild confidence including rate cuts and expanded liquidity facilities, Kohn said in prepared remarks to a conference in Luxembourg.”
RW: Honestly, I don’t know what else they can do…..short of forcing banks to loan to each Tom, Dick, and Harry that come along. Wait a minute. If anything, the Fed has shown that it is willing to do anything it takes….anything. Trichet, on the other hand, has something to learn in this area.
U.S. rejects proposal to forgive credit card debt
“The feds smacked banks in the head early today, warning them to get more aggressive with lending to ease the credit crunch.
And a few hours later, we hear this, via the Associated Press: Federal bank regulators have rejected a request by banks and consumer advocates for a program to let lenders forgive huge portions of credit card debt.”
RW: This article caught my eye; today I received a correspondence from my credit card with a too-enticing offer (you know, those write a check and we give you a low rate of interest things) for the current state of the credit system. I was shocked…and apparently, so is the Fed.
Russian Default Risk
“It wasn’t too long ago that a confident Russian Bear flush with easy commodity bling threw caution to the wind and strutted into Georgia to establish dominance in the region.”
RW: I really like this site; his sense of humor and acumen on financial markets makes for a great read!
And away from economics we go; one shouldn’t forget FOX’s truly glorious reporting:
'Sex and the City' Star Describes Life After Defying Death
RW: David Duchovny has sunk from the renowned X-Files to this crap; makes me so sad. Oh well, must continue to love Richard Dean Anderson (not because he is sexy, you know, Robert Redford - youg Robert of couse - takes that cake).