Tag Archives: Featured

Since the LIBOR scandal erupted, US officials have been working toward an alternative benchmark.  In 2014, the Fed set up a working committee that includes more than a dozen large banks and regulators   Before the weekend the committee (Alternative Reference Rates Committee) proposed two possible replacements for LIBOR. There reportedly was some consideration of using the Fed funds as an alternative.  However, Fed funds were rejected because it would have been made it more difficult to...

Authorities in Switzerland and Singapore are punishing BSI, the private bank based in the Ticino region of Switzerland, for alleged money-laundering offenses, shutting their activities in Singapore and seizing part of its profits. Switzerland’s attorney general has opened criminal proceedings against BSI Bank in connection with alleged money-laundering and corruption by Malaysia’s statement investment fund 1MDB. In a separate move, the country’s financial market regulator said the bank was...

Submitted by Patrick Watson via MauldinEconomics.com, Central bankers use low or negative interest rates so that it leads to more investment. For them interest rates are a consequence of the currently very low inflation rates. Patrick Watson argues in the exactly opposite way: Falling prices are a consequence of low interest rates and not the opposite: We see two reasons why this can be true: High, maybe excessive investment is happening in China (alas not in Europe). Cheap costs of...

Ye olde tattered Crash Alert flag… should it be unfurled again? Image by fmh Black-and-Blue Crash Alert Flag Let us  begin the week “on message.” The Diary is about money. Today, we’ll stick to the subject.  Old friend Mark Hulbert has done some research on the likelihood of a crash in the stock market. Writing in Barron’s, he points out that the risk – or, more properly, the incidence – of crashes, historically, has been very small: “[…] consider that the 1987 and 1929 crashes were...

The US dollar lost momentum on May 24 but has regained it on May 25.  The euro has been pushed through last week’s lows near $1.1180.  The next immediate target is  $1.1145, which corresponds to the lower Bollinger Band today, though the intraday technical readings suggest some modest upticks are likely first.  The $1.1200-$1.1220 area may cap upticks. Source Dukascopy The greenback held above JPY109 and bounced to recoup 38.2% of its decline since the pre-weekend high near...

  Photo credit: Georges Schneider / APA Trapped in the EU Austria is a small European nation that has made the grievous mistake of needlessly joining the EU in 1995, together with Finland and Sweden. Austria’s neighbor Switzerland, which is of roughly similar size and likewise militarily neutral, proved to have far better instincts. The Swedes subsequently at least had the good sense to stay out of the euro zone. It seems if there is a mistake to be made, Austrian governments will...

In the 1970s economists started to incorporate rational expectations into their models and not long after the seminal Kydand & Prescott (1977) article named Rules Rather than Discretion: The Inconsistency of Optimal Plan was published. Their work has been driving the mainstream macroeconomic debate ever since. The question raised in this debate is how policy-makers can credible commit to promises made today when future events may cause short-term pain if restricted by stringent rules...

The yen is the strongest of the major currencies.  It has gained about 0.65% against the dollar.  It has been grinding lower throughout the Asian and European session and has remained in narrow ranges near its highs in the US morning. Japan still seems isolated in terms of it desire to intervene.  Ahead of the G7 heads of state summit this coming, the risk of intervention remains slight.  Asian and European shares were lower, which favors the yen.  US yields are flat, while the US...

  Originarios on the march… Photo credit: cta.org.ar  Alarming News BALTIMORE, Maryland – An alarming email came on Tuesday from our ranch in Argentina: “Bad things going on… We thought we had the originarios problem settled. Not at all. They just invaded the ranch.” To bring new readers fully into the picture, Northwest Argentina, where we have our ranch, has a revolution going on. Some of the indigenous people – that is, people with Native American blood – believe they have a claim on...

  Illustration via irs.com A Wake-Up Call The price of gold moved down about twenty Federal Reserve Notes, and the price of silver dropped $0.57. The big news is that the gold-silver ratio moved up about 1.5. We hate to say “we told you so,” well, OK. Actually… sometimes there’s a certain je ne said quoi about gloating. *Achem* In all seriousness, the dollar is going up. We measure it in gold, or alternatively in silver. In gold, the dollar rose 0.4mg gold to 24.84. In silver, it was up...